It is known that given the present conditions of globalization, along with internal factors, external factors also have a significant role to play for supporting economic growth. Exports are the impetus for long-term development, especially for countries that have a limited domestic market, such as Armenia. Thus, in Armenia's case we should take into account that the exports sector is still far from being a means for long-term economic growth. The trade deficit for the period of 2000-2011 composed more than 20% of GDP, which shows a significant imbalance in foreign trade.

The influence of exports and imports on the national economy is reflected in their densities in the GDP. The high density of exports in the GDP proves the national economy's saturation with an associated manufactured good as well as the competitiveness of the domestically manufactured good on the international market. In 2011, the index was 13% in Armenia and during the period of 2000-2011, the average of the index was 14.4%, which is considered pretty good in the world ranking. Thus, if we consider that the export market is mainly supported through some non-prospective areas, the picture will change dramatically.

Particularly, when calculating the aforementioned index in separate sectors, the precious and non-precious metals industry draws attention. In that sector the index is 34% (when taking into consideration that the same index is 14% for the total economy, we can conclude that Armenia specializes in the export of metals, which means that the export of raw materials is the only specialized industry).

In viewing Armenian exports according to commodity groups, we can say that during the period of 2000-2011 exports had a significantly high level of concentration: 84% of exports was on average shared between four commodity groups (precious stones and metals, non-precious metals, prepared foods and raw mineral materials).

Moreover, besides the concentration of exports, it is noteworthy that in the interim, raw materials exceed in exports, where the percentage of value added created in production is strictly limited. Moreover, it is subject to significant fluctuations in international prices, which increases export vulnerability. Therefore, it is necessary to seriously think about the sources for supporting economic growth as well as increasing export competitiveness and diversification of products in Armenia.

At the same time, international experience proves that a high pace of economic growth is registered in countries where the export structure changed from low-tech goods to high-tech goods. A specialization in the export of goods from natural resources is not a guarantee for high economic growth at all. Therefore, in order to learn the connection between exports and economic growth, we should analyze Armenian exports from a technological perspective.

We identify three technological commodity groups: resources (raw mineral materials, agricultural products and animal and vegetable products that exclude prepared foods), low technologies (the reprocessing industry, including goods from precious and non-precious stones and metals, wood and paper products, food, drink, cigarettes, textiles, leather and footwear) and high-tech products (chemicals, including pharmaceuticals, plastics, rubber, equipment and machinery, devices, land, water and air transport).

According to data from the Armenian National Statistical Service, in 2011 the density of low-tech and high-tech goods in Armenian exports decreased compared with 2001. Instead, the density of resource products increased. In spite of this, during that period low-tech goods had the highest density in Armenian exports (more than 60% during the mentioned period).

Moreover, during the same period, in the sub-group of common goods growth in exports was registered in all commodity groups, but the main segment of this sub-group belonged to raw mineral products (30% in 2011). The main density for low-tech goods belonged to the following commodity groups: precious stones and metals (on average 32%), non-precious metals and goods derived from them (on average 23.5%) and prepared foods (in average 12%).

In fact, despite that domestic production growth was registered every year, during the mentioned period Armenian exports from the perspective of economic growth support were developed using a very bad model, registering a number of missed chances for economy development. Thus, production is not enough; manufacturing products competitive in the international market is necessary. What potential for production and exports does Armenia have?  The responses to these questions are in my next column.

Lilit Sargsyan

Scientist of the Institute of Economics, National Academy of Sciences