Manuk Hergnyan is president of the “Economy and Values” research center and is responsible for preparing Armenia’s report for this year’s “World Competition Report-2006-2007” prepared by the “World Economy Forum” (WEF). According to Hergnyan, Armenia places 82nd in the list of 125 competitive countries and has moved down one spot compared to last year.
Despite the fact that the people following up on current events and Armenian journalists knew beforehand about the results, the public was supposed to know about the results later. According to Mr. Hegnyan, this is a violation. The thing is that the WEF hands out the report to mass media a couple of days before the results are known with the condition of not publicizing. However, this year “French-Press” violated that rule and gave out the report to almost all mass media (including Armenian mass media) and they have already published the results. But the details were presented later and they’re rather interesting.
According to WEF experts, competitiveness is more of a presumed mark of a country’s economic rise compared to the rate of economic rise. It has an influence on the opportunities for short-term and long-term economic rise.
The report was prepared using statistical information and surveys. Directors of 95 Armenian companies took part in the survey. According to Hegnyan, the selection of the companies was done based on the GDP of different economic fields and the specific weight.
The world competitiveness report has three sub-indices: basic (institutions, substructures, etc.), industrial (market efficiency, technological advances), as well as advances and business development factors. In fact, each country has a different specific weight for each of the abovementioned indices.
The less developed a country is (that’s calculated based on the GDP of each person), the more the WEF pays attention to the basics. Armenia, with a single GDP less than 2,000 dollars, is in the first group where the basics make up 50% and advances are only 10%.
Taking all this into consideration, Armenia places 82nd. Hergnyan says that it’s difficult to call this a loss because the average points of Armenia remain the same-3.75. Besides that, there were eight new countries added to the list this year and only one of those surpassed Armenia.
Switzerland was in first place compared to the U.S. last year. The U.S. went down to 6th place this year. The top five included Finland, Sweden, Denmark and Singapore.
Out of the CIS countries, Kazakhstan was in 56th place, Russia placed 62nd, while Azerbaijan and Ukraine shared 64th.
It’s understandable that Azerbaijan is economically more developed due to the oil. But how can we explain this when considering competitiveness? According to member of the board of the “Economy and Values” center Gagig Gabrielyan, the oil factor not only has an influence on the GDP mark, but also investments, thus technological advances and rise in the level of competitiveness. However, if we take a look at other sub-indices, we can see that this is debatable. For example, based on the demands of bases, Armenia places 81st, while Azerbaijan places 56th. However, judging from the improvement of the institutions of Armenia we can say that the amount of money is not that essential. In this sub-index, we are more developed in the health sector and middle school education than Azerbaijan. We are in 62nd place, while Azerbaijan places 96th.
The worst marks are for “market efficiency” and “business development level” categories. Armenia places 104th in both categories. According to the authors of the report, low marks show the economic rise of the given country, which is mainly due to the agriculture and the ongoing construction. They are mainly directed towards the domestic market, don’t really interact with international markets and as stated in the report, “don’t lead to the acquisition of skills of doing good business.”
The results of the survey among Armenian businessmen are rather interesting. Armenian businessmen claimed that there aren’t enough financial resources as the number one problem (18.26%). The second problem is corruption (16.09%) and then come taxation policies, administration and issues concerning the low levels of substructures.
As Armenians know, the major issue facing Armenian businessmen today is the sharp devaluation of the Armenian dram. However, only 4.79% of businessmen consider the “regulation of the exchange prices” as the major issue.
This can be explained with the fact that the surveys were taken in February-April 2006, but the exchange rates started to change in late May. Mr. Hegnyan informed that their center is currently working on a competitiveness report for Armenia, which will be released next year. Perhaps they will pay more attention to this issue in that report.
I really wanted to know if there was one field in which Armenia was at the top. For example, last year Armenia was at the top of the list for easily employing foreigners. This year we moved down to sixth place in that category, while Georgia placed first.
The best that we can be proud of is Armenia’s inflation rate. With that inflation rate, Armenia places 4th out of all the 125 countries. The only thing is we don’t know who to be thankful for: the Central Bank, which sets the inflation rate, or the National Statistics Service, which calculates and presents the inflation rate?