Armenia
Financing innovative entrepreneurs
Knowledge generation and absorption
Recent economic and innovation performance
Executive summary
Foreword
Preface
Framework conditions, innovation policies and instruments
Prospective innovation-driven investment projects and information sources
Acknowledgements
The role of innovation in international economic integration
Industry-science linkages and collaboration in the innovation process
National innovation system and innovation governance
Context
Armenia faces unique geopolitical challenges and opportunities. The country is landlocked and faces important trade limitations. These are associated with border restrictions to the East (Azerbaijan) and West (Turkey) resulting from tensions and the unresolved dispute over the Nagorno-Karabakh region and from international sanctions on its neighbour to the South (the Islamic Republic of Iran) as well as on its main trading partner (the Russian Federation). In addition one of the main export routes the Verkhniy Lars border crossing between Georgia and the Russian Federation becomes often impracticable due to the weather conditions (when snow or rain impede transit) while exports through the Georgian ports on the Black Sea are affected by unreliable ferry schedules. Armenia however is also the cradle of a trading civilization at the crossroads between the Eurasian Economic Union (EAEU) the European Union (EU) and the Persian Gulf countries which it is uniquely positioned to service thanks to its proximity and preferential trade regimes.
Preface
UNCTAD Investment Policy Reviews (IPR) are intended to help countries improve their investment policies with the objective of meeting the Sustainable Development Goals (SDG) and to familiarize governments and the international private sector with an individual country’s investment environment. The reviews are considered by the UNCTAD Commission on Investment Enterprise and Development. The analysis is based on the Investment Policy Framework for Sustainable Development (IPFSD) and its core principles and guidelines (UNCTAD 2015). The recommendations of the IPR are then implemented with the technical assistance of development partners including UNCTAD. The support to beneficiary countries is delivered through a series of activities that can span several years. Consistent with the SDGs IPRs encourage official development assistance and investment in countries where needs are greatest. The IPR recommendations are in line with countries’ national development plans and focus on key development sectors including agriculture mining manufacturing tourism and infrastructure. By helping countries in this manner the IPR programme notably contributes to:
Strategy
Armenia is a small landlocked country with exceptional geopolitical and logistical obstacles to trade. Upon independence in 1991 there was a painful collapse of some prominent industries as their assured markets were lost but a traditional strength in science and technology survived. Now nearly 30 years later there is a sense that Armenia is truly an “economy in transition” with growth in areas of traditional strength and an emerging revival in dormant sectors of the economy. Nontraditional exports are growing though from a small base and hightech activities are booming fuelled by local skills and the diaspora. Looking to the future this report is tasked to assess the prospects for export and efficiency-seeking investment with particular reference to the role that FDI could play in developing traditional sectors (e.g. textiles agribusiness wine or tourism) as well as new sectors (such as artificial intelligence and deep technology pharmaceuticals and several regional services) and contributing to sustainable development and inclusive growth. The chapter begins with the strategic context: what are Armenia’s export markets does it offer the efficiencies that investors seek and how much of a resource is the diaspora? This part is not prescriptive. The current market arrangements and the efficiency profile are taken as given to identify the investment prospects for export and efficiency-seeking investors. The second part selects the most likely winners and assesses their prospects for FDI attraction. Where needed new policy measures are proposed to complete the reforms recommended in chapter I. A review of key outcomes needed in the current re-engineering of investment promotion closes the chapter.
Note
Under its overall mandate on trade and development the United Nations Conference on Trade and Development (UNCTAD) serves as the focal point within the United Nations Secretariat for all matters related to foreign direct investment (FDI). Its work is carried out through intergovernmental deliberations research and analysis technical assistance activities seminars workshops and conferences.
The investment framework
Since independence Armenia has deployed consistent efforts to improve the legal and regulatory framework for business and although several laws require updating and finetuning in line with good practice no major legislative gaps exist. Indeed in some areas such as business registration or access to land Armenia has become a model for other countries. Notwithstanding remaining complexities Armenia has also moved to simplify its tax regime and streamline incentives modernize its competition policy framework and improve governance. It is also in the process of upgrading the legislation in other areas including foreign investment corporate governance intellectual property environmental protection as well as labour and foreign hire. Clear challenges however persist in several of these areas and the analysis contained in this chapter aims to support the reform efforts by identifying remaining bottlenecks and providing inputs and recommendations to further strengthen the legal and institutional framework and its impact on sustainable development. The analysis as well as the recommendations are based on the Investment Policy Framework for Sustainable Development – IPFSD (UNCTAD 2015).
Acknowledgements
This report was prepared by the Investment Policy Reviews (IPR) Section under the supervision of Chantal Dupasquier Chief of the Section Division on Investment and Enterprise (DIAE). Overall guidance was provided by Joerg Weber Head of the Investment Policies Branch DIAE. James Zhan Director of DIAE UNCTAD provided guidance on overall framework and strategic approach of the IPR. The report was drafted by Rory Allan Ariel Ivanier and Massimo Meloni. Substantive inputs were provided by Joseph Clements Hamed El Kady and Mxolisi Artwell Ngulube.
Acknowledgements
Conclusions and recommendations
Foreword
UNDP's response and strategies
Terms of reference
UNDP's contribution to development results
Introduction
Strategic position of UNDP
Executive summary
Development challenges and national strategies
Financial framework for Urban development
According to the data provided and the comments from the relevant stakeholders the city of Goris lacks a proper financial system. The budgetary authority of the municipality is highly restricted with little room for manoeuvre. The purpose of finance is dynamic; it should serve the city’s needs for development and not just be used for maintenance and for the calculation of the depreciation of the existing social and physical infrastructure. This Part will cover this in more detail.
Overview of the city of Goris
The city of Goris was selected as the pilot city for Armenia for three main reasons: its strategic position in the system of roads in Armenia; its rich cultural and historical heritage; and the commitment of its community and local government to make their city smarter and more sustainable.
Summary of the recommendations
With regard to the three pillars of economy environment and society and culture a key outcome of the expert workshop and stakeholder consultation was a first list of measures that are absolutely necessary to improve the economic environmental and sociocultural situation of the city of Goris. This list was evaluated based on expert opinion (from the Environment Agency Austria (EAA) the UNECE and International Society of City and Regional Planners (ISOCARP)). The measures were analyzed according to their benefits the required resources and whether they could be realized on a short-term basis.