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Enhancing the Role of Diaspora in Sustainable Development of Armenia by Gohar Gyulumyan, Terry Sanford Institute of Public Policy, Duke University, AIPRG Conference May , 2008 Outline Definitions of basic terms Stakeholders Regional and development contexts of Armenia The Armenian diaspora The Policy Problem Policy alternatives Recommendations: A new role for the diaspora Definitions Diaspora – geographic dispersion of a nation, settlement in different political entities, but members maintain their national identity, unity and solidarity Capacity and opportunity to sustain long-term development Sustainable Development Maintain Democratic Stability Ensure Regional Stability Major Stakeholders Home Country Armenia Host countries Neighboring countries in the region International Organizations DIASPORA Armenia: Regional Context Russia ARMENIA Regional context: high density of conflicts, unequal access to cost-effective infrastructure Armenia: Development Context GDP per Capita – 2600 USD (2007), Transfers from diaspora (per capita) – 350 USD, Poverty – 29.8%, extreme poverty – 4.6% (2005) Resource poor, land-locked, Transportation corridors blocked Economic structure construction(22%), Industry (20%), Agriculture (18%) Foreign trade 49% of GDP, high export concentration ratio Transition Challenges Graph 1: GDP, employment, real wages % change, 1990=100 120 100 80 60 40 20 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Institutions, practices GDP 1990=100 Employment 1990=100 Real w ages 1990=100 Diaspora Communities Darkness of the color represents the density of Diaspora communities Diaspora: Major Facts 5-6 mln, hosted by 70 countries 1 bln USD (2006) annual assistance to Armenia (current transfers, remittances, humanitarian assistance) Poverty reduction support and post-conflict infrastructure rehabilitation Part of institutional power sharing arrangements in Armenia (political parties, printed media, etc.) Regional Conflict – human, financial, material resources, advocacy Channels of Diaspora Assistance Humanitarian/food Assistance Infrastructure Repair and post-conflict reconstruction Sponsoring cultural activities Diaspora Funding Supporting education Institutions Improving Healthcare facilities National Defense and security Dynamics of Diaspora Assistance Challenges Most of the diaspora assistance has a philanthropic nature Dispersed into different projects Creates sustainability concerns Armenia Lack of a single institution responsible for diaspora affairs Capacity gap to guide the diaspora’s efforts toward achieving its development objectives The Problem Tree C O N S E Q U E N C E S Sustainability concerns Persistent Tensions with neighbors in the region Low level of export diversification, High transaction costs Growing regional disparities between Yerevan and regions Strategic bargaining in political landscape Fragile political stability Low employment response to growth performance Policy Problem Inability so far to derive full potential benefits from diaspora R O O T C A U S E S Primary focus on philanthropy Heterogeneity Institutional rigidity Different perception of national identity mistrust Weak guiding capacities Transition challenges Inadequate institutional arrangements Competitive political environment Unwillingness to share the market Culture of talk Poor governance and accountability capacity What Can be Done? Policy Alternatives 1. Status Quo – unsustainable Growth Rate of Real GDP and Transfers from Abroad (1998=100) Armenia's Export Pattern and the Growth in Private Transfers (1998=100) 800.0% 800.0% 700.0% 700.0% 600.0% 600.0% 500.0% 500.0% 400.0% 400.0% 300.0% 200.0% 300.0% 100.0% 200.0% 100.0% 0.0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 Cummulative Real GDP Growth rate Growth in Incomes and Transfers from Abroad 0.0% 1998 1999 2000 Cummulative Export Growth rate 2001 2002 2003 2004 2005 2006 Growth in Incomes and Transfers from Abroad Growth in Incomes and Transfers from Abroad, adjusted for 45% depreciation of the USD in 2004-06 2. Partial revision of diaspora’s role – limited scope 3. Re-vision of diaspora role – better utilization of the nation’s comparative advantage New Role for Diaspora to Promote Armenia’s Sustainable Development Create capacities and opportunities to sustain long-term development path Support to achieve democratic stability Assume the role of a “Third Sider” in the matters of regional context Diaspora to promote Armenia’s Sustainable Development : Diaspora to change the nature of its assistance Recommendation Decrease philanthropy and increase business partnerships, Increase responsiveness of diaspora institutions, Offshore production activities to Armenia, Job opportunities, business culture, economic diversification Assist Armenia’s market access and international integration, (export expansion) Mobilize expatriate Armenians to close the capacity gap (examples: UNDP TOKTEN system, Korea) Armenia to Promote its own Sustainable Development Recommendation : Foster reforms, lead the dialogue Government Improve domestic competitive environment, Create new institution in charge of diaspora affairs, Improve public sector accountability, Improve quality of public discourse, Create trustworthy and transparent environment for partnership Engage diaspora in policy dialogue Private sector Create space for business partnership Institutional Arrangements Government of Armenia Diaspora Conference Diaspora Assistance, (Institutions and Individuals) Secretariat or Ministry Ministry of Foreign Affairs and All Armenia Fund Treasury Single Account, Central Bank of Armenia Treasury Office 1 Com munit y Treasury Office 42 Treasury Office 2 PIU PIU Com munit y PIU Com munit y Expected Benefits Armenia’s sustainable development perspective Good governance and openness Democratization of the society Spillovers and positive externalities for other countries in the region Expansion of regional markets Financial services Commerce, tourism, etc. Thank You