887) Armenia And Its Diaspora: Is There A Scope For A Stronger Economic Link? -Gevorkyan, Grigorian, Working Paper

Aleksandr V. Gevorkyan, Senior Financial Analyst, David A. Grigorian*, Economist, International Monetary Fund

April 2003

Abstract

The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the Armenian International Policy Research Group. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. . .

Since the devastating earthquake of 1988 and its independence in 1991, Armenia has attracted significant attention from the Armenian Diaspora. Starting off as a purely charitable undertaking, the Diaspora’s involvement in Armenia is evolving to include elements of cultural exchange, humanitarian assistance, and more recently also business life and economic policy. Our intention is to evaluate the extent of the Diaspora’s current involvement and suggest a meaningful and more proactive agenda for future relationship in areas of business and economic development. We argue for a more intensive as well as extensive participation of the Diaspora to ensure a stronger and broader-based economic development of Armenia, one that would enable the country to avoid commonly observed underdevelopment traps.

In addition to arguing for extensive exchanges through organized repatriation and volunteer opportunities as means of transferring know-how and a new (market-based) mentality, we discuss issues related to direct Diaspora investments (FDI) as well as more institutional vehicles for Diaspora involvement, such as investment funds, a pan-Armenian development bank, and eventually sovereign “Diaspora” bonds. The paper makes a contribution to the topic in that it offers a more tangible menu for Diaspora-Armenia relationship and spells out the economic benefits and shortcomings associated with each proposed menu item. In doing so, we attempt to address the institutional intensiveness of each of these channels and constraints imposed on each one by the current institutional setting and problems in public and corporate governance. But more than anything, the paper tries to set an agenda for future research related to the modalities of the Diaspora’s economic involvement in Armenia.

Journal of Economic Literature Classification: O1, O2, P3

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