Economic Development is Non-Existent in Armenia: Karen Adonts

Economic development is non-existent in Armenia. This was stated by economist Karen Adonts on his Facebook page.

He wrote, "LET'S DISCUSS TWO IMPORTANT ISSUES. NOW: 1) Is there economic development or not? No, there isn’t. A part of the economic growth recorded today isGDP that has been brought out of the shadows, and another part is the growth resulting from the natural redistribution of GDP. To illustrate (leaving aside the statistically accurate calculations), you create about $12 billion in new value, i.e., GDP (wages + profits), of which, say, $4 billion goes to the budget, about $5 billion to wages in the private sector, and $3 billion is net profit. This $3 billion net profit is distributed as follows: about $1.5 billion leaves the country, $0.5 billion turns into loans as savings, and $1 billion enters the economy in the form of various types of investments—not only for expansion of activities but also for ensuring simple reproduction. Significant external investments, without which serious development cannot be expected, are almost non-existent. Starting next year, when the disclosures of the informal economy decrease, recording economic growth in this manner will be significantly more challenging.

2) Is the existing economic growth inclusive or not? No. It can never be inclusive as long as the polarization of economic power continues to deepen and the current unfavorable ratio of competitive opportunities persists, and secondly, as long as our main competitive advantage lies in low wages (we can't hire all highly skilled programmers).

These issues can only be solved through three interconnected paths: A) Significant changes in the structure of the economy by developing sectors that generate substantial added value, which will increase the demand for high-wage professionals. B) Formation of large, profitable corporate entities where a significant portion of the population will be shareholders and will have growing additional income from dividends. C) Significant expansion of small entrepreneurship.

In this regard, in the mentioned directions, beyond general discussions, I do not see significant, structured steps. Simply put, realizing the scale and complexity of the issues and observing the quality of governance, I have little expectation."