Enhancing the Role of Enhancing the Role of Diaspora in Sustainable Diaspora in Sustainable

Development of ArmeniaDevelopment of Armenia

by Gohar Gyulumyan, by Gohar Gyulumyan,

Terry Sanford Institute of Public Policy, Duke University,Terry Sanford Institute of Public Policy, Duke University, AIPRG ConferenceAIPRG Conference

May , 2008May , 2008

OutlineOutline Definitions of basic termsDefinitions of basic terms

StakeholdersStakeholders

Regional and development contexts of Regional and development contexts of ArmeniaArmenia

The Armenian diasporaThe Armenian diaspora

The Policy ProblemThe Policy Problem

Policy alternativesPolicy alternatives

Recommendations: A new role for the diaspora Recommendations: A new role for the diaspora

DefinitionsDefinitions

DiasporaDiaspora – – geographic dispersion of a nation, geographic dispersion of a nation, settlement in different political entities, but settlement in different political entities, but members maintain their national identity, unity members maintain their national identity, unity and solidarityand solidarity

Sustainable Sustainable DevelopmentDevelopment

Capacity and opportunity Capacity and opportunity to sustain long-term to sustain long-term

developmentdevelopment

Maintain Democratic Maintain Democratic StabilityStability

Ensure Regional Stability

Major StakeholdersMajor Stakeholders

Home Country Armenia

Host countries

D I A S P O R A

International Organizations

Neighboring countries in the region

Armenia: Regional ContextArmenia: Regional Context

Russia

Regional context: high density of conflicts, unequal access to cost-effective

infrastructure

ARMENIA

Armenia: Development Armenia: Development ContextContext

GDP per Capita – 2600 USD (2007),GDP per Capita – 2600 USD (2007), Transfers from diaspora (per capita) – 350 USD,Transfers from diaspora (per capita) – 350 USD, Poverty – 29.8%, extreme poverty – 4.6% Poverty – 29.8%, extreme poverty – 4.6%

(2005) (2005) Resource poor, land-locked, Resource poor, land-locked, Transportation corridors blockedTransportation corridors blocked Economic structure Economic structure construction(22%), Industry (20%), construction(22%), Industry (20%), Agriculture (18%)Agriculture (18%) Foreign tradeForeign trade

49% of GDP, 49% of GDP, high export concentration ratio high export concentration ratio

Transition Challenges Transition Challenges Institutions, practicesInstitutions, practices

Graph 1: GDP, employment, real wages % change, 1990=100

0

20

40

60

80

100

120

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

GDP 1990=100 Employment 1990=100 Real wages 1990=100

Diaspora CommunitiesDiaspora Communities

Darkness of the color represents the density of Diaspora communities

Diaspora: Major FactsDiaspora: Major Facts 5-6 mln, hosted by 70 countries5-6 mln, hosted by 70 countries

1 bln USD (2006) annual assistance to Armenia 1 bln USD (2006) annual assistance to Armenia ((current transfers, remittances, humanitarian assistancecurrent transfers, remittances, humanitarian assistance) )

Poverty reduction support and post-conflict Poverty reduction support and post-conflict infrastructure rehabilitation infrastructure rehabilitation

Part of institutional power sharing arrangements Part of institutional power sharing arrangements in Armenia (political parties, printed media, etc.)in Armenia (political parties, printed media, etc.)

Regional Conflict – human, financial, material Regional Conflict – human, financial, material resources, advocacyresources, advocacy

Diaspora Funding

Political Parties

Benevolent Org.

Foundations

Individuals

Humanitarian/food Assistance

Sponsoring cultural activities

Improving Healthcare

facilities

National Defense and security

Branches of ChurchInfrastructure

Repair and post-conflict

reconstruction

Supporting education Institutions

Channels of Diaspora AssistanceChannels of Diaspora Assistance

Dynamics of Diaspora Dynamics of Diaspora AssistanceAssistance

ChallengesChallenges

Most of the diaspora assistance Most of the diaspora assistance has a philanthropic naturehas a philanthropic nature Dispersed into different projectsDispersed into different projects Creates sustainability concernsCreates sustainability concerns

ArmeniaArmenia Lack of a single institution responsible Lack of a single institution responsible

for diaspora affairs for diaspora affairs Capacity gap to guide the diaspora’s Capacity gap to guide the diaspora’s

efforts toward achieving its efforts toward achieving its development objectivesdevelopment objectives

The Problem TreeThe Problem Tree

Strategic bargaining in political landscape

Low level of export diversification,

Growing regional disparities between Yerevan and regions

CCOONNSSEEQQUUEENNCCEESS

Low employment response to growth performance

Fragile political stability

Persistent Tensions with neighbors in the region

High transaction costs

Sustainability concerns

Inability so far to derive full potential benefits from diaspora Policy ProblemPolicy Problem

RROOOOTT

CCAAUUSSEESS

Primary focus on philanthropy

Institutional rigidity Weak guidingcapacities

Inadequate institutional arrangements

Different perception of national identity

mistrustCompetitive political environment

Culture of talk

Heterogeneity

Unwillingness to share the marketPoor governance and accountability capacity

Transition challenges

What Can be Done?What Can be Done? Policy Alternatives Policy Alternatives

1. Status Quo – unsustainable1. Status Quo – unsustainable

0.0%

100.0%

200.0%

300.0%

400.0%

500.0%

600.0%

700.0%

800.0%

1998 1999 2000 2001 2002 2003 2004 2005 2006

Cummulative Real GDP Growth rate

Growth in Incomes and Transfers from Abroad

Growth in Incomes and Transfers from Abroad, adjusted for 45% depreciation of the USD in 2004-06

0.0%

100.0%

200.0%

300.0%

400.0%

500.0%

600.0%

700.0%

800.0%

1998 1999 2000 2001 2002 2003 2004 2005 2006

Cummulative Export Growth rate Growth in Incomes and Transfers from Abroad

Armenia's Export Pattern and the Growth in Private Transfers (1998=100)

Growth Rate of Real GDP and Growth Rate of Real GDP and Transfers from Abroad Transfers from Abroad (1998=100)(1998=100)

2. Partial revision of diaspora’s role – limited 2. Partial revision of diaspora’s role – limited scopescope3. Re-vision of diaspora role – better utilization 3. Re-vision of diaspora role – better utilization

of the nation’s comparative of the nation’s comparative advantageadvantage

New Role for Diaspora to Promote New Role for Diaspora to Promote Armenia’s Sustainable DevelopmentArmenia’s Sustainable Development

Create capacities and Create capacities and opportunities opportunities to sustain long-term development pathto sustain long-term development path

Support to achieve democratic Support to achieve democratic stabilitystability

Assume the role of a “Third Sider” Assume the role of a “Third Sider” in the matters of regional contextin the matters of regional context

Diaspora to promote Diaspora to promote Armenia’s Sustainable Armenia’s Sustainable

DevelopmentDevelopmentRecommendationRecommendation: : Diaspora to change the nature of its Diaspora to change the nature of its

assistance assistance Decrease philanthropy and increase Decrease philanthropy and increase

business partnerships,business partnerships, Increase responsiveness of diaspora Increase responsiveness of diaspora

institutions,institutions, Offshore production activities to Armenia,Offshore production activities to Armenia,

Job opportunities, business culture, economic Job opportunities, business culture, economic diversificationdiversification

Assist Armenia’s market access and Assist Armenia’s market access and international integration, (international integration, (export expansionexport expansion))

Mobilize expatriate Armenians Mobilize expatriate Armenians to close the capacity gap to close the capacity gap ((examples: UNDP TOKTEN system, Korea) examples: UNDP TOKTEN system, Korea)

Armenia to Promote its own Armenia to Promote its own Sustainable DevelopmentSustainable Development

RecommendationRecommendation: : Foster reforms, lead the dialogueFoster reforms, lead the dialogue

GovernmentGovernment Improve domestic competitive environment, Improve domestic competitive environment, Create new institution in charge of diaspora Create new institution in charge of diaspora

affairs, affairs, Improve public sector accountability, Improve public sector accountability, Improve quality of public discourse, Improve quality of public discourse, Create trustworthy and transparent Create trustworthy and transparent

environment for partnershipenvironment for partnership Engage diaspora in policy dialogue Engage diaspora in policy dialogue Private sectorPrivate sector Create space for business partnershipCreate space for business partnership

Treasury Single Account,Central Bank of Armenia

Diaspora Conference

Treasury Office 1

Treasury Office 2

Treasury Office 42

Community

PIU PIU Community

CommunityPIU

Diaspora Assistance, (Institutions and Individuals)

Ministry of Foreign Affairs and All Armenia Fund

Secretariat or Ministry

Government of Armenia

Institutional ArrangementsInstitutional Arrangements

Expected BenefitsExpected Benefits Armenia’s sustainable development Armenia’s sustainable development

perspectiveperspective Good governance and opennessGood governance and openness Democratization of the societyDemocratization of the society Spillovers and positive externalities for Spillovers and positive externalities for

other countries in the regionother countries in the region Expansion of regional Expansion of regional

marketsmarkets Financial servicesFinancial services Commerce, tourism, etc. Commerce, tourism, etc.

Thank YouThank You