Poverty reduction in Armenia: the role of the World bank in combating poverty

Abstract

The demise of the Soviet Union at the end of 1980s posed severe challenges for Armenia. Like other newly independent states, Armenia’s economy suffered much from that breakup. Consequently, after Armenia declared its independence on September 21, 1991, it started to develop and employ its own strategic framework of political, structural and economic reforms. However, the absence of historical precedence and the lack of experience made the costs for independence and consequent transition to a market economy very high, for the country is still bearing the hardships of the early years of its transition. Though nowadays Armenia has steadily growing GDP rates, poverty still persists in the country, meaning that rapid economic growth is not the one and the best way for alleviating poverty, unless it assures some equity. Indeed, economic growth is an important factor for poverty reduction, but it is not sufficient for its full eradication. Poverty is an issue, for the reduction of which are concerned not only countries that face it but also the whole international community, which can have both direct and indirect intervention in Armenia's poverty reduction strategies. The World Bank is among those international organizations that has an essential role in combating poverty all over the World, as well as in Armenia. The purpose of this Project is to examine the current poverty and unemployment trends in Armenia, to review what strategic framework of reforms is defined in the country concerning that issue. Moreover, to assess the assistance of the international community in general, and the World Bank in particular, in the process of operationalizing poverty reduction policies in Armenia and to find out whether poverty reduction keeps pace with economic growth rates in the country. The first section discusses main theoretical approaches to the problem and refers to the poverty situation in Armenia. Second section underlines the structure of public and governmental expenditures towards education, health care, and social assistance. The third section analyzes policies combating poverty: domestic efforts and international assistance, PRSP, WB. The final section will summarize the paper and provide some policy recommendations.