On May 31, “Economical values” analyzing center organized an on-line visual conference with management scientist, professor of Harvard University, Michael Porter with the technical support of USAID and the framework of its “Competitive Private Sector in Armenia” project.
Michael Porter has worked out a university course called “Competition Micro Economy”, which is taught in over 50 universities of the world besides the Harvard University. For over three years now, the chairman of the “Economical values” analyzing center, Manuk Hergnyan teaches this subject in the economics faculty of the Yerevan State University. Since Mr. Porter was informed about Armenian economy, he answered to questions concerning the competitiveness of our country.
Michael Porter thinks that it is not right on behalf of the governmental bodies that are responsible for finding new fields of development to focus only on concrete macro economical fields. He says that it is important too, but he thinks that micro economical factors are more important for competitiveness, i.e. the factors that stimulate production. “Competitiveness is a result of productivity”, says the American professor.
During these recent years the Government considers tourism and IT as the main fields providing economical growth. But maybe it is better to concentrate on mining production or jewelry production. Porter says that all fields are good and they should not be developed separately. This is a hint to our government saying that they shouldn’t pay attention to several fields only and should support the development of all fields together and systematically. As for IT, the professor says that the development of this field may be very important for economic development in general. He brought up the example of Estonia. According to him the reason that this country has become a huge IT producer is the fact that the state has created much demand for IT products.
When speaking about Armenia, Michael Porter also had to answer to questions concerning corruption. He said that countries like Armenia, where there aren’t much mining resources, should cut down corruption and make the monopolistic businesses competitive. Only after this will it be possible to speak about economic, successful growth. According to Michael Porter, Armenia should think about this and “form a clean government”. He brought up the example of Singapore: Singapore’s government is authoritarian, but it is still “clean” and is not corrupted. This means that it is possible to be in power and be in high positions without stealing from the people and the state. Besides that, the professor said that “the government must not be involved in entrepreneurship”.
As for the Armenian Diaspora, Mr. Porter said that we should consider all of the Armenian Diasporans as ordinary investors, nothing more. They are interested in the business environment inside the country too, as well as the political situation and corruption inside the country. He says that it is impossible to cheat on them or to make them believe you. They see and understand everything. This is probably the reason why there is not so much help from the Diaspora in domestic economy as there should be.
The professor was also asked about the energetic field of Armenia and what he thought about the fact that almost the entire energy is under the control of Russia, but he avoided giving a concrete answer to that question. He only said that in Armenia people know better about the importance of Russia in their economy. As for the presence of big international organizations like the International Financing Fund and World Bank in Armenia, Mr. Porter said that it was good for Armenia. But in spite of this he thinks that these institutions only provide macro economical factors and substructures, “as for the real values, they are created by companies”.
In closing, Michael Porter said that experience shows that small countries can succeed if they implement the correct policy.