Remittances Bolster—and Limit—Armenia’s Potential – Opinion

There are reasonsThe following is a list of suggested resources. December Special IssueThe 30th anniversary marks the end of the Soviet Union. This is part of an ongoing investigation into the global legacy that this evil empire left behind. We want to make sure that there are no further tragedies. The terrible consequences of communism cannot be ignored

Armenia went through more trials in 20th-century Armenia. The tiny country has struggled to recover its feet after a genocide in which more than one million people were killed, an annexation of the Red Army (1922) and the devastating earthquake of 1988.

Many Armenians are able to send money home and work in foreign countries because there is no high-paying job. Armenia was ranked amongst the top twenty countries in receiving remittances. It accounted for 13% of its GDP as of 2017. Over 40% of Armenian households receive money from their relatives overseas.

The Soviet period saw a boom in remittances. However, the country’s dependence on them has been high for years because of a lack of economic opportunities. Although Armenia has a growing IT sector and long-standing copper and gold mines. However, its minimal agricultural potential, harsh terrain and geopolitical instability have slowed down its growth.

Armenia went through massive industrialization between the 1950s and 1960s. The Soviet legacy of technical education is still strong. Because Armenia is so poor, many Armenians have a high education level. But a lack of technological advances during the later Soviet period forced Armenia to rely on sending people—typically younger adult men—to other countries, with Russia receiving somewhere between 70 and 90 percent of its migrant workers.

Aleksandr V. Gevorkyan is a St. John’s University professor of economics. He says that remittances can help both poorer families living in rural areas as well as middle-income families living in cities. However, they can be a major contributor to poverty reduction over the last 20 years, but they will only work if they come from the construction and service industries.

Armenia is a country where “migration has a significant impact on communities especially in rural areas” wrote Rebecca L. Thomas in The. Journal of Family and Economic Issues 2018 Working abroad can be very frustrating, as many Armenians emigrate to do lower-skilled work than they are capable.

Gevorkyan explains that saving money through remittances helps to improve living standards and get out of extreme poverty. This makes financial sense, as long the income is available. The income will stop if the relative returns. Remitting money is a bad strategy long-term for Armenia’s economic growth.

There’s also a significant cost to family members who stay behind—especially women, who may experience worse overall education prospects with the burden of household labor shifted to them. Children may feel pressured to get into the workforce earlier than they finish school.

Gevorkyan doesn’t believe that Armenia can be permanently helped by remittances.  He believes that structural change is the way to improve economic development. He says that Armenian entrepreneurs need an environment where they can thrive.