The Second Systematic Country Diagnostic (SCD) for Armenia, titled “Beyond Boundaries: Unlocking Potential for a Sustainable Tomorrow” assesses the key challenges and opportunities for the country to accelerate progress toward ending extreme poverty on a livable planet. The report revisits the first diagnostic published in 2017 to account for key changes in Armenia’s internal and external environment and reflects on the past five years during which the country has reached upper-middle income status. This diagnostic identifies strategic pathways towards sustainable development in Armenia and offers insights and recommendations for navigating challenges in key areas:
- Investing in Human Capital: The report finds that Armenia can improve the quality of human capital and transform it into a dynamic asset. For example, education can be enhanced by focusing on quality and prioritizing equal access, particularly in rural areas, rather than emphasizing enrollment numbers. There's also an urgent need to reform healthcare financing to reduce out-of-pocket expenses and to help to ensure affordable access for all, which would boost inclusion of vulnerable groups of population. This presents an opportunity to foster a highly skilled workforce that drives innovation and economic growth.
- Creating more and better-quality jobs. The report shows that targeted efforts to create more and better job opportunities in Armenia could reduce high unemployment rates and support poverty reduction. Bridging the mismatch between job seekers' skills and the demands of the labor market, particularly through vocational training and education programs, and enhancing productivity can foster a more dynamic and competitive economy.
- Diversifying Trade: Armenia can expand the reach of its under-utilized trade potential by diversifying its trade partners and exports. By forging new partnerships and raising the standards of its export products, Armenia can unlock new avenues for economic prosperity. This diversification can bolster resilience against global economic fluctuations and enhance the country's competitiveness on the international stage.
- Ensuring access to markets: A landlocked country located in a region of difficult topography, facing development barriers related to physical connectivity, trade logistics, and digital connectivity. Poor infrastructure within the country is an obstacle for accessing goods, services, and labor markets and for the delivery of basic public services in remote rural areas. By investing in infrastructure and streamlining logistics and customs services, Armenia can improve access to goods, services, and employment opportunities. This not only fosters economic growth but also strengthens integration into global value chains.
- Building Resilience: Armenia can bolster resilience against various shocks, including those related to fragility, conflict, and climate change by prioritizing the empowerment of rural communities, most vulnerable groups of population and promoting gender equality.
- Harnessing Technology and Diaspora: Armenia can capitalize on its strong expertise in information and communication technology (ICT) and leverage its diaspora as a global resource. By harnessing the power of technology and tapping into the resources and networks of its diaspora, Armenia can foster innovation, entrepreneurship, and knowledge exchange. This strengthens global connections and drives sustainable development.
The report serves as an important foundation for the World Bank Group’s new Country Partnership Framework (CPF) for Armenia, which will be released later in 2024, outlining the World Bank’s financial and analytical support to the country in implementing crucial reforms in the next five years.