Geographical Issues in Armenia
Encyclopedia
Armenia, a former republic of Soviet Union
, is a landlocked
country in the Caucasus Mountains
between the Black Sea
and the Caspian Sea
. The country is bordered on the north by Georgia
and Iran
to the south; Azerbaijan
lies to the east and Turkey
to the west.
is plagued by numerous ongoing economic and developmental problems that can be largely attributed to Armenia's poor geographic location combined with other economic and social factors.
According to Forbes
magazine, Armenia had the second worst economy
in the world in 2011 in terms of gross domestic product
growth, inflation
(including the IMF’s 2012 estimates), GDP per capita, and the balance of trade
. With a mediocre growth forecast for the next few years, the country suffers from high inflation and has a GDP per capita less than one third that of neighboring Turkey. Armenia's adverse geographical location is exacerbated by strained ties with Turkey and Azerbaijan and the borders to both countries are closed.
Lack of direct access to markets in Turkey and Azerbaijan due to poor diplomatic relations means that Armenian goods also suffer from a lack of access to markets in other regional countries. Furthermore, with a population of approximately 3.2 million, Armenia has a small domestic market with demand insufficient to stimulation significant growth.
s, Armenia must trade
across borders to reach major world markets in North America
and Europe
in order to maintain sustainable economic growth
and development. Cross-border trading, however, incurs higher transaction cost
s and reduces competitiveness
and trade volume. In Armenia, poor existing physical infrastructure
such as road
s and railways compounds this problem by further raising the risk and cost of transport. Much of Armenia's infrastructure was built during the Soviet period and is in need of repair and renovation.
. It imports nearly all of its refined petroleum
products through Georgia and most of its energy fuel
from Russia. The 2008 South Ossetia War
between Russia and Georgia resulted in disruption to fuel and food imports.
Soviet Union
The Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991....
, is a landlocked
Landlocked
A landlocked country is a country entirely enclosed by land, or whose only coastlines lie on closed seas. There are 48 landlocked countries in the world, including partially recognized states...
country in the Caucasus Mountains
Caucasus Mountains
The Caucasus Mountains is a mountain system in Eurasia between the Black Sea and the Caspian Sea in the Caucasus region .The Caucasus Mountains includes:* the Greater Caucasus Mountain Range and* the Lesser Caucasus Mountains....
between the Black Sea
Black Sea
The Black Sea is bounded by Europe, Anatolia and the Caucasus and is ultimately connected to the Atlantic Ocean via the Mediterranean and the Aegean seas and various straits. The Bosphorus strait connects it to the Sea of Marmara, and the strait of the Dardanelles connects that sea to the Aegean...
and the Caspian Sea
Caspian Sea
The Caspian Sea is the largest enclosed body of water on Earth by area, variously classed as the world's largest lake or a full-fledged sea. The sea has a surface area of and a volume of...
. The country is bordered on the north by Georgia
Georgia (country)
Georgia is a sovereign state in the Caucasus region of Eurasia. Located at the crossroads of Western Asia and Eastern Europe, it is bounded to the west by the Black Sea, to the north by Russia, to the southwest by Turkey, to the south by Armenia, and to the southeast by Azerbaijan. The capital of...
and Iran
Iran
Iran , officially the Islamic Republic of Iran , is a country in Southern and Western Asia. The name "Iran" has been in use natively since the Sassanian era and came into use internationally in 1935, before which the country was known to the Western world as Persia...
to the south; Azerbaijan
Azerbaijan
Azerbaijan , officially the Republic of Azerbaijan is the largest country in the Caucasus region of Eurasia. Located at the crossroads of Western Asia and Eastern Europe, it is bounded by the Caspian Sea to the east, Russia to the north, Georgia to the northwest, Armenia to the west, and Iran to...
lies to the east and Turkey
Turkey
Turkey , known officially as the Republic of Turkey , is a Eurasian country located in Western Asia and in East Thrace in Southeastern Europe...
to the west.
Economic conditions in Armenia
The developing countryDeveloping country
A developing country, also known as a less-developed country, is a nation with a low level of material well-being. Since no single definition of the term developing country is recognized internationally, the levels of development may vary widely within so-called developing countries...
is plagued by numerous ongoing economic and developmental problems that can be largely attributed to Armenia's poor geographic location combined with other economic and social factors.
According to Forbes
Forbes
Forbes is an American publishing and media company. Its flagship publication, the Forbes magazine, is published biweekly. Its primary competitors in the national business magazine category are Fortune, which is also published biweekly, and Business Week...
magazine, Armenia had the second worst economy
Economy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...
in the world in 2011 in terms of gross domestic product
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
growth, inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
(including the IMF’s 2012 estimates), GDP per capita, and the balance of trade
Balance of trade
The balance of trade is the difference between the monetary value of exports and imports of output in an economy over a certain period. It is the relationship between a nation's imports and exports...
. With a mediocre growth forecast for the next few years, the country suffers from high inflation and has a GDP per capita less than one third that of neighboring Turkey. Armenia's adverse geographical location is exacerbated by strained ties with Turkey and Azerbaijan and the borders to both countries are closed.
Lack of direct access to markets in Turkey and Azerbaijan due to poor diplomatic relations means that Armenian goods also suffer from a lack of access to markets in other regional countries. Furthermore, with a population of approximately 3.2 million, Armenia has a small domestic market with demand insufficient to stimulation significant growth.
High transportation cost
As a landlocked country with no direct access to main shipping routeShipping route
A shipping route is a trade route used by merchant ships.Early routes usually were coastal in nature as navigators had to rely on the coastal landmarks...
s, Armenia must trade
Trade
Trade is the transfer of ownership of goods and services from one person or entity to another. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and...
across borders to reach major world markets in North America
North America
North America is a continent wholly within the Northern Hemisphere and almost wholly within the Western Hemisphere. It is also considered a northern subcontinent of the Americas...
and Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
in order to maintain sustainable economic growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
and development. Cross-border trading, however, incurs higher transaction cost
Transaction cost
In economics and related disciplines, a transaction cost is a cost incurred in making an economic exchange . For example, most people, when buying or selling a stock, must pay a commission to their broker; that commission is a transaction cost of doing the stock deal...
s and reduces competitiveness
Competitiveness
Competitiveness is a comparative concept of the ability and performance of a firm, sub-sector or country to sell and supply goods and/or services in a given market...
and trade volume. In Armenia, poor existing physical infrastructure
Infrastructure
Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...
such as road
Road
A road is a thoroughfare, route, or way on land between two places, which typically has been paved or otherwise improved to allow travel by some conveyance, including a horse, cart, or motor vehicle. Roads consist of one, or sometimes two, roadways each with one or more lanes and also any...
s and railways compounds this problem by further raising the risk and cost of transport. Much of Armenia's infrastructure was built during the Soviet period and is in need of repair and renovation.
Vulnerabilities to external shocks
Most landlocked countries are vulnerable to external shocks due to their dependence on neighboring countries and Armenia is no exception. Poor ties with Turkey and Azerbaijan only serve to strengthen Armenia's dependence on Georgia and RussiaRussia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
. It imports nearly all of its refined petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
products through Georgia and most of its energy fuel
Fuel
Fuel is any material that stores energy that can later be extracted to perform mechanical work in a controlled manner. Most fuels used by humans undergo combustion, a redox reaction in which a combustible substance releases energy after it ignites and reacts with the oxygen in the air...
from Russia. The 2008 South Ossetia War
2008 South Ossetia war
The 2008 South Ossetia War or Russo-Georgian War was an armed conflict in August 2008 between Georgia on one side, and Russia and separatist governments of South Ossetia and Abkhazia on the other....
between Russia and Georgia resulted in disruption to fuel and food imports.
See also
- ArmeniaArmeniaArmenia , officially the Republic of Armenia , is a landlocked mountainous country in the Caucasus region of Eurasia...
- Armenia-Azerbaijan relationsArmenia-Azerbaijan relationsArmenia–Azerbaijan relations refers to the bilateral relationship of Armenia and Azerbaijan, as well as relations between the Armenian and the Azerbaijani societies...
- Armenia-Georgia relations
- Armenia-Iran relations
- Armenia-Turkey relations
- Caucasus MountainsCaucasus MountainsThe Caucasus Mountains is a mountain system in Eurasia between the Black Sea and the Caspian Sea in the Caucasus region .The Caucasus Mountains includes:* the Greater Caucasus Mountain Range and* the Lesser Caucasus Mountains....
- Economy of ArmeniaEconomy of ArmeniaArmenia is the second most densely populated of the former Soviet republics. It is situated between the Black Sea and the Caspian Sea, bordered on the north and east by Georgia and Azerbaijan and on the south and west by Iran and Turkey....
- Foreign relations of ArmeniaForeign relations of ArmeniaSince its independence, Armenia has maintained a policy of complementarism by trying to have friendly relations both with Iran, Russia, and the West, including the United States and Europe. However, the dispute over the Armenian Genocide and the recent war over Nagorno-Karabakh have created tense...
- Nagorno-KarabakhNagorno-KarabakhNagorno-Karabakh is a landlocked region in the South Caucasus, lying between Lower Karabakh and Zangezur and covering the southeastern range of the Lesser Caucasus mountains...