SOCIAL AND ECONOMIC DEVELOPMENT OF THE REPUBLIC OF ARMENIA IN THE TERMS OF «NEW ECONOMY»
СОЦИАЛЬНО-ЭКОНОМИЧЕСКОГО РАЗВИТИЕ РЕСПУБЛИКИ АРМЕНИЯ В РУСЛЕ «НОВОЙ ЭКОНОМИКИ».
Минасян Арус Гамлетовна, старший преподаватель кафедры «Экономические науки», Ереванский филиала РЭУ им. Г.В. Плеханова, кандидат экономических наук
Искаджян Симон Оганнесович, кандидат экономических наук, кафедра экономических наук, Ереванский филиал РЭУ имени Г.В. Плеханова
Minasyan Arus Gamletovna, Senior lecturer of the Department of ” Economic Sciences», The Yerevan branch of REU them. G. V. Plekhanov, PhD in economics
Iskadzhyan Simon Ogannesovich, PhD in economics, Department of economic Sciences, Yerevan branch of Plekhanov Russian University of Economics
Summary. In the current difficult economic situation in the Republic of Armenia the solution of economic problems implies adaptation of foreign trade processes to the market economy, the integration of national economies into the world economy, the protection of national interests, for the settlement of foreign trade relations. The decisive role belongs to the national economy, the activities of which should be aimed at the protection and diversification of the market, the provision of national and economic security, and the establishment of effective and mutually beneficial relationships with trade partners and increase of the capacity of the competitiveness of domestic firms in foreign markets.
Аннотация. На современном этапе развития экономики РА решение насущных экономических проблем предполагает соответствие внешнеторговых отношений к условиям рыночной экономики, интеграцию национального хозяйства в мировую экономику, урегулирование внешнеторговых отношений в русле защиты национальных интересов. В данном контексте конечной целью государственного урегулирования внешней торговли должны быть защита и диверсификация рынка, обеспечение национальной и экономической безопасности страны, построение эффективных и взаимовыгодных отношений с внешнеторговыми партнерами, расширение возможностей конкурентоспособности отечественных фирм на внешних рынках.
Keywords: globalization, internationalization, foreign trade, “new economy”, economic security.
Ключевые слова: глобализация, интернационализация, внешняя торговля, «новая экономика», экономическая безопасность.
Key factor of country’s foreign economic with market economy is determined by liberalization of internal market, thus on a macro level the individual companies and organizations get the opportunity to choose external markets and foreign partners, choose the variety of goods or services for export or import, set the price for deals and the forms of calculations as well as the volume and terms of delivery. Internal factor of realization of external economic state is identified by global economy, which defines the growth of international trade volume and unprecedented development of product markets.
Global economy is the openness of national economics. It is the objective reality when the country is not able to independently secure socio-economic growth, therefore has to enlarge the use of internal factors in interest to further progressive economic growth. Global economy is an opportunity to use innovative technologies, machinery of new age, modern methodologies business management, which are largely utilized abroad, as well as the opportunity to be integrated in international production cooperation by means of attracting additional material and financial resources. In fact, Globalization contributes to the social advancement and the growth of employment and eradicates poverty. The process of economic globalization is not only a factor of socio-economic growth but also a direct threat for those countries which do not possess open economy and fail to integrate into the system of international employment breakdown. Global economy is a favorable factor for developed countries and is a forcing factor for developing countries to implement structural reforms to reduce the gap with developed countries, otherwise they become incompatible with the global economic system and are condemned to lag behind. No matter to what extent it is necessary for the country to participate in the global economic processes, the risks reduction is highly important and may be achieved based on well-developed structural changes in national economy. In this context, mostly benefit the countries which offer knowledge-based goods, ready to use products and services, finally those countries which offer their own products to the whole world. In the 1990s, pursuing an open foreign economic policy in the Republic of Armenia, the liberalization of trade and currency policy had no alternative. This policy has opened a way to the system of global economic relations for our country. In the 1990s, the openness of the economy was the important tool that has lead to relative macroeconomic stability in the Republic of Armenia. At the present stage of development, Armenia cannot ignore the features and patterns of development of the world economy, since they are the first stage for integration into the global economy. Current world trade is characterized with structural deviations. Before the 2nd World War the world product flow had the raw-material focus, starting from 1990s the share of manufactured goods has been steadily increasing, which is more than 2/3 of trade. Nowadays, in terms of economic security of a country in the world there is applied strong factor of “New Economy” which is constituted on the bases of innovative information-communication technologies in economic operations, thus ensuring the emergence of new priority industries. Obviously, in such circumstances there are huge shifts in inter-sectoral proportions of international employment breakdown. The growth of income in innovative industries and obsolescence in traditional industries have led to formulation of new range of power between the national economy urging to the provision of respective structural reforms. It also can be attributed to the occurrence and escalations of new conflicts between the national economies which require respective structural reforms and the crisis in the system of international economic relations. Currently, the international trade emerging rapid economic growth and structural optimization of any country, constitutes 80% of products manufactured industries, first off, knowledge-based products which is likely to be achieved as a result of strong relations based on specialization and manufacturing cooperation. Unfortunately, such development bypasses the Republic of Armenia, as the bulk of trade in export structure are raw-material products. Comparative advantages of Armenia in the process of international breakdown of employment are reflected in acquisition and export of raw materials. Thus, as it was mentioned above, based on high quality human capital the “New Economy” and rapidly developing industry of information technologies, is currently the focus of attention of developed countries hence predetermine the comparative advantages. Armenia should also go to that direction of economic development, particularly because the process of raw material export has declined, which means that in the foreseen future it may result in decline of foreign trade role in GDP increase. The Processes of anti-industrialization of our economy are direct threats for national security. Armenia lags far behind the world high-tech market. According to “The Global Competitiveness” Report 201 published by World Economic Forum, Armenia stands in the low levels in innovation 9capabilities, being in the 62th position out of 141 countries ( that its higher than the position 70th in 2018) 1. Gross national expenditures allocated on scientific research and development work (R&D) comprise only 0.24% of GDP 2.
All the positive shifts in economy of Republic of Armenia are mainly related to high prices of mining products and increase of volume in construction. In such conditions there are two scenarios of economic development of the country: passive and active. Passive scenario cannot provide the desired outcomes as raw-material resources are not infinite. More over:
- Their price is not stable on the world market, respectfully they do not guarantee stable income and are direct threats for the national security.
- Export of mineral resources leads to single vector development of economy.
- The level of economic development of a country is characterized by share of products of value added price in production and in export, which is obviously ignored in this case.
- In case of “raw-material scenario” the value of human capital as a main active of innovative economy decreases, which contribution to dynamic economic growth among the developed countries is 50-70%.
- The combat between the primitive economy and objective demands of society in science and education is compounded due to obsolescence of raw structure.
Direct impact of such controversy is that various higher education institutions in Armenia produce specialists targeted at “export” (Table 1).
In 2018, the total number of employees, employed at scientific research and development companies in Armenia was 4425, out of which 410 doctors of science and 1404 candidates of science3. In 2004 the total number of employees was 6685, including 487 doctors of science and 1811 candidates, in case that in 1988 the total number of scientific workers in Armenia was 21800 thousand out of which 800 doctorates and 7400 candidates4. That is in 1988-2004 the scientific potential of RA decreased 3,3 times and in 1988-2018 decreased 4,5 times. Thus, it could be affirmed that the favorable way for economic development of Armenia is active innovative development.
However, the economy of Armenia faces huge problems as openness of economy in global postindustrial world does not imply structural integration. Despite the growth in high-tech product export, the share in total volume of export remains negligible and is 5,3% of total exports2.
Nowadays, Armenia can introduce not only scientific technological potential to the world but also it has the capability to become transit country. Of course, it is necessary to modernize transportation infrastructure and contribute to the export of transportation services. Contemporary well developed transportation infrastructure is capable of transforming Armenian geographic characteristics into competitive advantages. The lack of infrastructure conditions, in our view, does not enable us to use Armenia as a corridor for transit between Western Europe, Middle Asia, Russia and Persian Gulf. This is also impeded by the political disagreements between Armenia and neighboring countries.
List of the Literature
- Global Competitiveness Forum Report 2018-2019 https://reports.weforum.org/global-competitiveness-report-2019/
- National competitiveness report of Armenia 2017, page 7
- “The Issues of Interaction of Capital and Workforce International Migration”. Dissertation of the degree of doctor of economics in “World Economy” specialty. Tadevosyan Z., Yerevan 2007. Page 209