On the occasion of the 20th anniversary of Armenia’s independence Mediamax agency took an interview from the former President of Armenia Robert Kocharyan.
Ultimately it’s worth mentioning that Kocharyan was the President of independent Armenia over half of its history – 10 years. Indeed the interview will be in-depth discussed in the coming days. But we are most interested in the part of the interview, which related to the economic achievements and prospects of Armenia. And so the journalist asks the following question to Robert Kocharyan, “Independent Armenia will mark its 50th anniversary in 30 years. What will it be like then?” As a response Kocharyan says, “I don’t know. A little more than 50 years ago, Somalia and South Korea had almost the same GDP per capita and today it’s even more impossible to compare these countries. Somalia is torn apart by contradictions. The population is starving, whereas South Korea has become a powerful industrial country and one of the world’s leaders by a number of branches of economy. This is the effective management, the vision of perspectives and the choice of proper development model. I believe Armenia has a serious potential to become the most effective country in the South Caucasus. Time will show how this potential will be realized.” Let us try to understand this. Robert Kocharyan’s “I don’t know” doesn’t mean at all that he doesn’t have his own vision of country’s development. It means that the former leader of the country doesn’t know, who will be the leadership of the country in 30 years. He doesn’t know whether the future leaders will have sufficient wisdom and desire to make the country the most developed country of the region. And the response means that he has the potential to develop Armenia and assist the latter to become a progressive state. The situation is interesting because in the case of Kocharyan the history is right there as evidence. We do have statistical data as well. So we can assess what he has achieved in the aspect of the “use of potential” and “selection of the correct model of development.” But everything depends on which criteria we should rely on to make our assessment. The former President also prompted the answer of this question as well – GDP per capita. In the case of this index Kocharyan has reached a real success. During the declaration of independence in 1991 Armenia GDP per capita was 589 USD. According to the data of World Bank of 2010 this index reached 2998 USD. This is an impressive growth. We should mention that this growth was registered during Kocharyan’s tenure. In 1998 when he submitted the post of the President the index was 609 USD. In 2008 when he passed on the power to Serzh Sargsyan the index reached 3790 USD (later it reduced due to the crisis).
If we draw comparison with other countries, which had similar GDP index like us in 1991 then I think our rates are not so bad. During 20 years our GDP grew 5 times and only a few countries can compare with us with that kind of progress. If we look at this table and compare numbers then we should be very proud of our progress and should thank the former government and President for their efforts in this direction. But there are buts… First of all the index of GDP per capita grows not only because of the growth of GDP but because of the reduction of population as well. And I think no one will argue that during the past years there has been tremendous migration from Armenia. Secondly, even the 5 times growth of the index doesn’t mean anything in the case of Armenia where there is such polarization of wealth. In other words, as a result of this growth the wealthy ones got wealthier and the lifestyle of average citizens didn’t change much. With the same reasons the dual-digit growth of the economy in the 2000s didn’t mean much because the actual use of it was very low for the population. Even the international structures bring this matter up. For instance, in 2011 the European Commission released its report titled, “Social Protection and Social Inclusion in Armenia.” It’s possible to read the following in the report, “Although the high economic growth for the population generally means income, increase employment and other macroeconomic indicators improved, and of course, poverty reduction, economic growth in the years not accompanied by equivalent reductions in poverty. In 1999. 56.1% to 34.6%, down from 2004, and 28.7% in 2009).” In other words, this means that the growth of real value is very exaggerated, the report referred to the specific features of economic growth, which shocks may be considered "as sources of economic indicators of vulnerability." To say that these "features" are a novelty, it will be wrong, simply structured and brief enumeration of them is another opportunity for summing up what has won in double-digit economic enhancements. Here is what the authors wrote in the report. "Armenia’s economy is characterized as: (I) having a limited basis, (II) according to areas of less diversified, (III) micro economic deviations – small and medium enterprises, small section, which is suspended by new firms and small business development, and, consequently, the creation of new jobs, employment growth and unemployment reduction, (IV) the important role of remittances in the economy, which mitigates the impact of transition on the welfare of households, (V), an economy, where a large informal sector. According to various analysts’ estimates of the shadow economy in 2010 amounted to gross domestic product – the total amount of about 35-40%. Let’s agree that among these flaws the “shiny” index of GDP per capita dims. As of the “right model of development” then maybe the model has been initially selected correctly but the reality was really deviated from this model. At any rate, back in 1991 nobody would ever imagine Armenia be a country surviving at the expense of elite construction and external monetary remittances.