Armenian Economy Considered ‘Most Monopolized’ Among Ex-Soviet States

A slide from the “Re-Engineering a New Growth Model for Armenia: Accumulation, Competition and Connectivity” report

YEREVAN (RFE/RL)—Armenia has the most monopolized economy among former Soviet Union and Eastern European countries, according to a new report released by the World Bank (WB).

The report entitled “Re-Engineering a New Growth Model for Armenia: Accumulation, Competition, and Connectivity” was presented at the WB Yerevan office on Wednesday.

According to the report, about 20 percent of Armenia’s economy belongs to monopolies, which is the highest rate among former Eastern bloc countries, while along with oligopolies (when two or three players dominate the market) monopolies control nearly two-thirds of Armenia’s economy.

“A limited number of companies are dominant in the main sectors, the share of monopolies and oligopolies in the entire economy remains high,” said World Bank senior economist Gohar Gyulumian.

For several years top government officials in Armenia have declared at the highest level that issues of separating political powers and business and dealing with oligopolies remain among the priorities of the authorities. The latest World Bank report shows, however, that no progress has been made in Armenia in this direction yet.

The World Bank report also calls for a new growth model for job creation in Armenia. It outlines four areas crucial for that purpose, including higher investment and better financial intermediation between savers and investors, private sector-led job creation and improvement of workers’ skills, stronger competitive pressures in the markets for goods and services to improve incentives for companies to innovate, adopt new technologies, and become more efficient.

“Competition is thus of crucial importance for the dynamism of the economy. Pro-competition reforms and effective implementation of antitrust rules can lead to significant productivity gains and consumer savings,” says the report, whose authors also call for enhancing connections of the landlocked Armenian economy with world markets, including through land, air, and through internet and communication technologies, “as that would contribute to efficiency gains and competitiveness.”

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6 Comments

  1. Armanen said:

    Does this study take into account that closed or semi closed borders make the emergence of monopolies and oligopolies easier?

  2. Armenian said:

    There is not competition between companies in Armenia. Armenian companies are ruled by maffiosi and criminal government.

  3. Sarkis said:

    Again, this sort of statistic really proves nothing about Armenia. Monopolies are actually a very common occurrence in businesses, even among the Western “free markets and democracies”, let alone a tiny, blockaded, landlocked newly emerging market like Armenia which has to maintain a state of constant war preparedness and compete in an arms race with a petrostate like azerbaijan which has billions to spend. In almost all of the biggest and most lucrative industries in the West, one finds either monopolies, duopolies or at best oligopolies of government-connected mega-corporations in control. And unlike in Armenia, western companies get to live large on corporate welfare (like the GM and Chrysler bailouts, the banking bailouts, e), and the revolving door system whereby ex-CEOs (like Dick Cheney of Haliburtron) retire from private industry and move into big governmental positions). The USA for example is consistently rated very poorly in terms of IT infrastructure, with some of the slowest average internet speeds among developed countries. Similarly, Microsoft and Apple for a virtual duopoly over computer operating systems; a handful of agrobusinesses control the food industry (and use that control to introduce GMOs the world over), Boeing is a monopoly in the large civilian airlines market; almost all printed and electronic media in the US is controlled by about five major media corporations (that’s thousands and thousands of television networks and newspapers by each of those groups), domestic cable and telephone is a monopoly or duopoly in most regions of the US. And let’s not even mention the privately owned Federal Reserve System and the banking cartel.
    Armenia will need time, stability and a gradual change in the mentality of Armenian citizens before it can ease into a totally free market. Until that time, and taking into consideration Armenia’s uniquely bad geopolitical situation, there is no use in raising hysteria about monopolies in Armenia.

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