0: 3 0 2 A I N E M R A G N I M R O F S N A R T T N E M P O L E V E D E H T E P A C S D N A L SKOLKOVO Institute for Emerging Market Studies (IEMS) 2017 Content Executive Summary 9 Introduction 13 Chapter 1. Development as a Market: 5 Global Game-Changers in the SDG Era 17 1. Emergence Of New Segments, New Actors And New Instruments Within The Development Market 21 2. Transition From Charity To The Impact-Oriented Mindset 25 3. Unprecedented Opportunities For The Private Sector 28 4. Blended Finance 32 5. ‘Innovation-For-Development’ 34 Impact As A Central Cornerstone Of The New Paradigm 36 Chapter 2. Development As A Market: Armenia 38 Measuring Development 39 Economic Growth During The MDG Era 40 Beyond-GDP Growth During The MDG Era 43 Development Enablers. Supply Side Of Armenia’s Development Market 44 Intraregional Comparisons 46 Donor-Assisted Growth. Multilateral Development Aid 51 Donor-Assisted Growth. Bilateral Development Aid 54 U.S.A. as a Donor 56 Germany as a Donor 56 Diaspora-Assisted Growth 57 Private Sector-Assisted Growth 62 State-Assisted Growth 66 Implementing Development Interventions. Demand Side Of Armenia’s Development Market 68 Transitioning From MDGs To SDGs: Armenia’s Snapshot Position 70 Chapter 3. 5 Basic Principles of Post-2015 Development Agenda in Armenia 72 1. Reversing Migration Flows 78 2. Engaging Diaspora 82 3. Seizing ‘Innovation-For-Development’ Opportunities 83 4. Seizing ‘Development-As-A-Business’ Opportunities 84 5. Adopting New Tripartite Social Contract (Mandate-For-Development) 85 Conclusion 86 Appendix: Casebook 90 One-Village One-Product (OVOP): Development With Technical Cooperation In 9 Regions Of Armenia 91 Donor-Led Integrated Area-Based Development In Tavush Region 98 Charity-Led ‘Housing Revolving Fund For Development’ Model In 10 Regions 104 Charity-Led ‘Pay-It-Forward’ Development Model In 6 Regions 109 Start-Up Led Technology-For-Armenian-Development Model 114 Private Agency For Social And Economic Development (PASED): Business-Led Development In Tatev 119 References 130 Content 1 Project Team Kamila noVAK, Research Lead/Senior Analyst, Sustainable Business Center, Institute for Emerging Market Studies, Moscow School of Management SKOLKOVO Yulia ADAMSKAYA, Research Associate, Institute for Emerging Market Studies, Moscow School of Management SKOLKOVO No part of this publication may be reproduced or transmitted in any language, in any form or by any means, including photocopying and recording, or by any information storage or retrieval system. The views expressed are those of the authors and do not necessarily reflect the views of Moscow School of Management SKOLKOVO, as well as any companies and organizations mentioned in the report. 2 ARMenIA 2030: tRAnSFoRMInG tHe DeVeL oPMent LAnDSCAPe Acknowledgements The project team would like to express sincere gratitude and acknowledge the contribution of the following colleagues: Alexey KALInIn, Academic Director, Institute for Emerging Market Studies, Moscow School of Management SKOLKOVO, for his leadership, most brilliant ideas and co-authorship; Bulat nUReeV, Managing Director, Institute for Emerging Market Studies, Moscow School of Management SKOLKOVO, for his forward- thinking vision during the idea incubation phase and throughout the entire project; oleg ReMYGA, Director of International Projects, RVVZ Foundation for continuous support with external communication and strategic vision; natalia Zaitseva, Head, Sustainable Business Center, Moscow School of Management SKOLKOVO, for valuable insights and suggestions. ACKnowLeDGeMentS 3 4 ARMenIA 2030: tRAnSFoRMInG tHe DeVeL oPMent LAnDSCAPe List of Contributors Karen Gevorgyan, Deputy Executive Director, SME DNC; Lilit Apujanyan, Head of International Cooperation Programs Division, Small and Medium Entrepreneurship Development National Center of Armenia (SME DNC); Katsutoshi Fushimi, Chief Representative, JICA Uzbekistan Office; Seno Ryuji, Head of JICA expert panel; Ruzan Khojikyan, JICA Armenia Office Representative; Arman Valesyan, Project Coordinator, UNDP-Armenia; Armen tiraturyan, Project Coordinator, UNDP-Armenia; Suren Aloyan, Founding President/CEO; Dasaran; Ashot Yeghiazaryan, President, Fuller Center for Housing Armenia; Rouzanne Sakanyan, Resource Development Manager, Fuller Center for Housing Armenia; Anahit Ghazanchyan, Country Director and Project Manager, Heifer Armenia; Hayk tutunjyan, Tatev Development Project Manager, IDeA Foundation; Gayane Hovsepyan, Programme Development Manager, IDeA Foundation; Sara Anjargolian, Co-founder and CEO, Impact Hub Yerevan; timothy D. Straight, Founder and Executive Director, Homeland Development Initiative Foundation 5 DEAR FRIENDS, I am happy to present this report by the Armenia. We also believe that Armenia is a SKOLKOVO Institute for Emerging Market perfect showcase for the practical operation Studies on the economic and social develop- of private development models, and we hope ment of Armenia. their experience will inspire positive chang- es in other emerging-market economies. SKOLKOVO Business School is committed to studying business practices in the Eurasian Like many of us here in SKOLKOVO Busi- context, and to increasing the awareness of ness School, I have many Armenian friends. the international business community about I would like to acknowledge that we all feel ways of doing business in our part of the very connected to Armenia. This report in- world. This report goes beyond pure busi- cludes a long list of contributors, many of ness and explores the evolving domain of in- whom are high-profile international and Ar- ternational development in a specifically Ar- menian development practitioners with a menian context. deep understanding of the country’s develop- ment landscape. I would like to thank them all The importance of international develop- for their collaboration with SKOLKOVO Busi- ment initiatives for Armenia cannot be over- ness School. I hope that the insights which stated. They have made a huge impact over we present in this report will be of interest to the last 15-20 years. We are convinced that, government, policymakers, private investors in the Sustainable Development Goals era, and the international financial institutions such development not only has the poten- who work both for the benefit of Armenia and tial to make a significant social impact, but for the prosperity of its people. also offers unprecedented market opportuni- ties for a wide range of actors, including the Andrei SHARONOV, private sector. We are very much inspired by the possibilities which business participa- President, tion in the development market opens up for Moscow School of Management SKOLKOVO 6 ARMenIA 2030: tRAnSFoRMInG tHe DeVeL oPMent LAnDSCAPe DEAR FRIENDS, I am glad to present you this report on the motherland. This nation has produced a record transformation of the development landscape number of globally-recognized ambassadors in of Armenia. It has been prepared by SKOLKOVO culture, business, and science who act as the HKUST Institute for Emerging Market Studies. key contributors to the development of Arme- nia. I strongly believe that the entrepreneur- I feel very special about this work for three rea- ial spirit of the nation and its openness to the sons. First, the report discusses one of the most world will being Armenia success and sustain- significant transformations of the business able prosperity. landscape in recent years. The introduction of UN Sustainable Development Goals opens up Armenia has been a home for EY since 1999. tremendous opportunities for conventional de- During all these years we have been assisting velopment financing institutions as well as a local and international businesses and the Ar- whole new universe of private development menian public sector by building a better envi- actors and impact investors. This change will ronment and stronger communities. The many bring hope to many nations across the globe Armenians working in EY all over the world that are still facing social and environmental are essential parts of our family, and make challenges. great contributors to our global service. EY is a proud supporter of the Aurora Prize for Awak- Secondly, Armenia is, in many ways, a region- ening Humanity - a global Armenian initiative al showcase which illustrates how internation- that supports individuals across the globe who al development institutions and private im- made an exceptional impact in preserving hu- pact investors could work together with gov- man life and advancing humanity. ernment and local communities by addressing social, economic and environmental problems. EY is also a founding strategic partner of Being relatively small, landlocked and with a SKOLKOVO Institute for Emerging Market complex geopolitical context, Armenia demon- Studies (IEMS) as well as similar IEMS pro- strates how international development initia- grams at Hong Kong University of Science and tives create substantial economic opportunities Technology (HKUST) and the India School of not only in traditional sectors of the national Business (ISB). We are very happy to support economy, such as agriculture, tourism, and hos- research endeavors as this one. pitality, but also in digital and finance. I hope you will enjoy reading this report. Finally, Armenia is a truly global nation. Arme- nians are part of one of the largest and most re- Jay NIBBE, sourceful diasporas in the world, with the ma- Global Vice-Chair, Tax, EY jority of ethnic Armenians living outside their 7 Executive Summary 8 ARMenIA 2030: tRAnSFoRMInG tHe DeVeL oPMent LAnDSCAPe