“First News”The interlocutor is Professor Ruben Inchikyan of Webster University of Geneva. Ruben Inchikyan, professor of economics and management, worked at the United Nations Conference on Trade and Development (UNCTAD) for about 30 years.

– Mr. Inchikyan, Former Prime Minister of Armenia Hrant Bagratyan believes that the economic situation will worsen in the coming months of 2019, the Central Bank should not stabilize the dram exchange rate. What does your analysis show?

– I agree with Hrant Bagratyan. He means that lowering the dram exchange rate will lead to the strengthening of Armenia’s export competition. There are always two sides. when states want to keep their dram exchange rate stable. This has an important component, firstly, so that foreign investors believe in the economic and political risks of that country, that if they establish a production in a country like Armenia, they will receive approximately the same amount of dollars for the costs of the produced drams. If the dram falls, then foreign investors may suffer losses. At the same time, the producers in Armenia, who have mainly dram expenses and can export and receive dram equivalent to the dollar, but here there is also the question of Russia, how the Russian ruble will move against the dollar. But if we analyze the trade in dollars, it can boost Armenia’s export potential to some extent. And in this sense, I agree with Bagratyan.

– How do you evaluate Armenia’s economic strategy? In general, how to promote production capital in Armenia? Nikol Pashinyan noted that a process of economic transformation is taking place in Armenia. The goal of the government is to make Armenia a technological industrial country. Is it possible?

– I fully share this position of Pashinyan. He talks about the diversification of the Armenian economy and wants to create new jobs with new, higher productivity and added value sectors of the economy. Of course, they should mainly produce not for the domestic market, but for the foreign market. Armenia should take advantage of its intermediate status and assume the role of a connecting country with post-Soviet and Western countries if they want to invest in Armenia and enter the EAEU market. And Armenia can create its production base, mainly by solving the issue of capital accumulation thanks to foreign investments, then produce and sell those goods and services to the EAEU, why not also to the countries of the Middle East. Armenia should play the role of such an important link that can connect several chains. In the same way, Armenia can play an important role in China’s and in the future India’s foreign investment, so that they too choose Armenia, a place that will be able to consolidate all the logistics of the development of the Silk Road through information technology, and thus help China’s Silk Road implementation process. Therefore, it is important to find opportunities to export what can be sold by creating information technologies, the Internet, information bases. In other words, to enter huge projects as a country providing an important service. And I think Pashinyan’s strategy is very correct. Along with that, of course, a program should be presented. And I think that will be the main problem of the new government. And congratulating the new government from the bottom of my heart, I suggest that they start thinking about the strategy of economic development and export potential, I would say, on the strategy of exponential growth from the very first days. And for that, the most difficult issue, the issue of capital accumulation, must be resolved.

– During the past seven months, the Prime Minister repeatedly called to come and invest in Armenia, because now the field in Armenia is favorable for investments. Do you think the field of investments will expand next year?

– The fact that Pashinyan offered to come and make investments, and also announced that our revolution did not cause economic shocks, was the right approach. Pashinyan did the right thing by holding quick elections. And it showed that Armenia is a democracy, although they say that Pashinyan and his team will make decisions alone, but I do not agree. Today there are three parties in the National Assembly. It is also wrong to say that the other two cannot be in the opposition, because they are separate parties and may not agree with the position of the My Step alliance. And if those two forces do not agree, and “My Step”, having a majority in the parliament, passes its decisions, in any case, the signals of the opposition will sober it up and they will think for a long time before making a new decision. There is an opposition in Armenia that can be constructive and help the ruling power. Having received the people’s trust, “My Step” and Pashinyan’s government as well, if they take steps to improve the political and economic situation and implement programs in the right way, it will be an important incentive for investors to come and invest in Armenia. During seven months, Pashinyan did not have such a political base as he has after the elections. And now no political force can stop him if he organizes well and can use all the specialists in the right way. I would put an old but literate specialist next to a newly revolutionary, but not yet fully trained young specialist. I see on Facebook that there are professionals who work in a serious organization, but instead of giving professional advice, they go beyond that framework and make various criticisms, which is quite unpleasant. Our educated elite should become more patriotic and not selfish and should be able to unite around the idea of ​​the country’s development and not to show themselves.

Armenia faces an important problem: the problem of capital accumulation. It is necessary to find important directions for accumulation of production capital, development and growth of new productions. First, Pashinyan’s government should create a truly development state, where institutions will work well, guide foreign investors and create mechanisms based on information technology, say, a single window system, a system for establishing a fast business, a system for supporting foreign investors. These institutions will provide answers to all the questions that concern them and create an environment of legal protection where they will be able to protect their rights while working with local partners. Our Armenian entrepreneurs will also understand that the courts in the new Armenia will be completely independent and will make a fair decision if there is a dispute between partners. This will be a signal for foreign investors that they can come and open productions. And Armenians working in many international companies can also attract the attention of their companies that they can come to invest in Armenia, which in turn will be an incentive for increasing the volume of direct investments. As for portfolio investments, they have the property that they can both enter and leave the country quickly. Capital is flowing out of many developing countries these days. And representatives of such speculative capital, playing on the difference between interest and income, make money. And if the interest rate in Armenia is high and the Central Bank protects the dram, it means that a foreign portfolio investor can enter Armenian securities, earn interest and hope that the exchange rate of the dram and the dollar will remain the same, and then exit. And the so-called hot money comes in as easily as it comes out and may not be very positive for the development of the country. And so the government should give a clear signal that it is waiting for long-term investments, to develop the production base, so that the country can profit more with its products and finally reach the point where Armenia’s exports are greater than its imports. This should be one of the priority tasks of the government, so that Armenia does not depend on the financial assistance of friends living abroad in the future.

And finally, it is necessary to apply the experience of the active industrial policy of Southeast Asian countries in supporting exporting companies. The state here accelerated the process of capital accumulation by allowing companies that channeled their earnings into new investments and exports to receive major benefits, exempting a portion of that income from taxes, allowing exporting companies to import machinery and other equipment without paying import duties, and giving these companies the opportunity to obtain loans at lower interest rates if the products were exported.