IS ARMENIA A POOR OR DEVELOPING COUNTRY?
By Appo Jabarian
USA Armenian Life Magazine
April 5, 2010
Armenia is a developing country. In fact, during the last decade,
Armenia has registered an impressive economic growth rate. But how
fast is Armenia moving to being fully developed?
It survived a devastating earthquake in 1988. It overcame the
calamities of war with Azerbaijan in the 1990’s. It underwent brutal
transition from Soviet centralized economy to free market economy.
Since then the Armenian economy has been steadily developing. Armenia
now is economically one of the more advanced states in the Caucasus
region.
However, unlike developed countries such as the United States, and
the European Union, Armenia has more than its share of poverty. Is
this a temporary problem?
"In the wake of the global recession, poverty has come to afflict
much of Armenia once again. For the first time in over a decade,
poverty increased in Armenia in 2009, with as many as half of
Armenia’s residents now living below the poverty line and unable
to meet basic food, shelter and healthcare needs. And yet, these
families continue their struggle to live, carving out an existence
at society’s margins where people regularly live off garbage dumps,
children battle malnutrition, and families sleep in barns and tin
shacks," reported a press release disseminated by Tufenkian Foundation,
the main sponsor of "How We Live: Life on the Margins in Armenia",
a special exhibit by photographer Sara Anjargolian.
The press release was published in the March 19 issue of USA Armenian
Life Magazine. The publication of the photo on the cover of the same
issue has ignited communitywide discussions on the issue of poverty
in Armenia.
When the idea emerged to give the exhibition front-page coverage, I
struggled between my objective to market Armenia as a very desirable
tourism and investment destination; and my journalistic duty to help
our people to adequately address the crucial issue of poverty.
Even before its opening in late March in Los Angeles, the exhibit
sparked a strong reaction from the Consulate General of Armenia in
Los Angeles.
On March 29, Consul General Grigor Hovhannissian issued a statement
to USA Armenian Life saying: "We would have welcomed this intention
of charity had there been no texts accompanying the exhibition
photographs. The generalizations of the phenomenon of the lifestyle
and living conditions of socially vulnerable families in Armenia may
create a wrong perception about the country’s and its population’s
living conditions."
Hovhannissian continued: "The webpage of this art exhibition literally
says the following: ‘Today, Armenia’s families struggling with poverty
are living off garbage dumps, children are battling malnutrition,
and alcoholism and domestic violence have become commonplace and
families are sleeping in tin shacks.’ This paragraph does not reflect
the overall image of Armenia’s population, including those living
in poverty. The tragic condition of families living off garbage and
struggling with alcoholism and violence is not a common phenomenon
and can not become ‘ordinary’ for Armenian families."
Despite acknowledging the existence of poor families in Armenia, Mr.
Hovhannissian stressed: "We believe that the exhibition organizers
have intensified the colors of poverty, and as a consequence, many
people may be disappointed with a country that’s full of negative
aspects of life. Many entrepreneurs may refrain from investing and
several tourists may be afraid to visit a country where ‘living off
garbage dumps’ and struggling with addiction and domestic violence
are commonplace. It would have been better had the evaluations been
made for specific cases. It would have been good to see the authors
of those texts go overboard in order to win the hearts of donors; and
in the process, not end up hurting Armenia, instead of helping. We
ourselves agree that indeed those families are in desperate need of
assistance, but not at the price of their dignity and ours."
Regardless of the extent of poverty in Armenia, it is unacceptable to
see even a tiny segment of its population live in inhumane conditions
caused by poverty.
According to a United Nations report in early 2000’s by Thomas
Kelly and Armen Yeghiazarian, income has been distributed across the
population in Armenia as follows: "One half of all income accrues
to just the richest 12 per cent of the population; the income of
the wealthiest quintile is 32 times higher than that of the poorest
quintile; and the poorest 55 per cent of the population – those whose
fall below the poverty line – receive just 16 per cent of the total
income. … Income inequality in Armenia is extremely high. …
Armenia’s income inequality is among the highest for transition
economies."
The report further elaborated on income inequality: "This high level of
inequality appears to be caused by the extreme concentration of incomes
in the top deciles of Armenian households. … Armenia’s transition
to a market economy can be divided into two stages. The first stage,
from 1990 to 1994, included an energy crisis, international conflict,
and the disruption of trade routes, hyper-inflation, and a severe
contraction of output. The second stage, beginning in 1995, has been
characterized by solution to the energy crisis, an end to conflict,
easing of transportation restrictions, a return to macroeconomic
stability, and moderate economic growth."
The report continued: "Since the second stage of the transition began,
the economy has been growing at roughly five per cent a year. The
current pattern of economic growth will not cause inequality to fall,
however. There are several reasons for this. The most important is that
the base of growth in industry, construction, and services is quite
narrow and is not generating a great deal of employment. At the same
time, the drive for higher productivity per worker in agriculture and
the reforms in the social sector will substantially reduce employment
in these sectors."
New sectors, namely High-Tech, Renewable Energy, and Agricultural
Exports have been added. But more are needed to generate enough
growth to enable the national economy to absorb the high levels of
unemployed workers from obsolete and noncompetitive industrial firms,
from agriculture, and from the overstaffed social infrastructure. Plans
must be developed to change the distribution of assets in order to
expedite employment growth to ultimately alleviate the magnitude
of inequality.
During the second stage of the transition, Armenia has registered
impressive growth rate, but little poverty reduction has been achieved
because of unequal redistribution of wealth.
Obviously, Armenia has not completed its transition to free market
economy. The first (1989-1994) stage was totally mishandled, and the
second stage (1995-present) was poorly handled albeit there has been
notable economic development.
One can easily envision the real growth Armenia is capable of by simply
taking into consideration the industrious characteristics of Armenians.
How can a nation like Armenia produce successful entrepreneurs, and
reputable industrialists, on international scale and still allow a
sizeable segment of its homeland population subsist in abject poverty?
High levels of inequality, greed, and corruption hinder both economic
growth and poverty reduction.
I propose that we collectively increase business investments
particularly in the sectors of Tourism, High-Tech, Education,
Agriculture, Consumer Goods, coupled by massive and long-term
educational efforts to eradicate corruption, and greed in the entire
spectrum of Armenian society. We must break up the monopolies that
grossly perpetuate income inequality.
Armenia’s domestic and international affairs urgently need to be
governed more efficiently so that we can collectively empower Armenia
leapfrog into the status of a developed nation.
It’s high time that an increased number of pro-active Armenians
everywhere take full ownership of both Armenia-Artsakh and the
Diaspora. It is absolutely necessary that Armenians worldwide further
harmonize their collective human and material resources for the sake
of a fresh and promising re-start.