Armenia ranks 57th in Economic Complexity Index

ArmInfo.A stable raw materials-based export development model has emerged in the Eurasian region (Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan). 

The region's industry is characterized by: insufficient and uneven technological sophistication; export specialization in  low-value-added sectors and import dependence in high-tech sectors;  and insufficient industrial cooperation between countries for  secondary value-added products. This is stated in the Eurasian  Development Bank's (EDB) analytical report "Development Potential for  High-Value-Added Industry in the Eurasian Region," which was  presented today.

It is noted that Armenia, which ranks 57th among the world's  catching-up industrialized countries, has demonstrated significant  progress in increasing economic complexity over the past three years.  Analysts expect Armenia to achieve a significant increase in export  potential of around 25% over three years, which is still lower than  Kyrgyzstan (28%) and Uzbekistan (26%). Armenia has an average import  substitution rate of 13%, compared to Russia's 23%, and Kazakhstan  and Uzbekistan's 16%.

Armenia's total industrial potential is estimated at $2.1 billion.  Armenia ranks 57th in the Economic Complexity Index, with  manufacturing accounting for 10.5% of GDP, or $2.7 billion. Medium  and high value-added processing in manufacturing accounts for 6.5%.  Stage 1 processing involves ores and copper concentrates (24% of the  total), gold (8.2%), and ferromolybdenum (5.5%). In the 2nd stage of  processing - cigarette production (10.4% of the total volume),  alcohol (9.4%), aluminum foil (3.6%), cutting production (2.6%),  jewelry (1.5%).

Armenia's priority industrial sectors with export potential include  basic metals ($214 million), food products ($103 million),  pharmaceuticals ($80 million), beverages ($38 million), computers and  electronic equipment ($31 million), machinery and equipment ($31  million), other finished goods ($25 million), electrical equipment  ($23 million), chemical products ($19 million), and automobiles ($17  million).

Priority sectors with import substitution potential include food  products ($123 million), pharmaceuticals ($99 million), computers  ($64 million), clothing ($63 million), machinery and equipment ($60  million), chemicals ($58 million), basic metals ($50 million),  automobiles ($42 million), tobacco products ($33 million), and  textiles ($33 million). The report states that the challenges of the  current development model can be addressed through diversification of  production and exports. The combined effect of increased exports,  import substitution, and increased output, if the potential for  development in the middle and upper processing stages of  manufacturing is realized, will exceed $510 billion per year. The  chemical industry (including pharmaceuticals), mechanical engineering  (primarily transport, particularly automotive), metallurgy, and the  food industry will make the largest contributions.

The Eurasian region's industry (which includes Armenia, Belarus,  Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan) is the  largest economic sector, accounting for approximately 31% of the  region's total GDP, equivalent to $834 billion in 2024. Manufacturing  plays a key role within this sector, generating 44.2% of industrial  gross value added, or approximately $368 billion (13.6% of regional  GDP).  Globally, the Eurasian region's manufacturing industry  accounts for 2.2% of global value added in the sector. This  correlates with the region's share of global GDP (2.4% in 2024).

According to the report, the share of medium- and high-value-added  products in Armenia's manufacturing industry is approximately 7% of  the Eurasian total, slightly higher than Tajikistan (3.5%) and  Kyrgyzstan (2.5%). Russia ranks highest at 34%, Belarus at 22%,  Kazakhstan at 17%, and Uzbekistan at 15%.  Armenia's share of  manufacturing in GDP is the lowest in the region at just 11%,  followed by Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Uzbekistan,  and Belarus.

The most industrially developed countries - Russia and Belarus - have  a comparatively high share of medium- and high-processed goods  (Russia ranks 33rd in the world according to the Industrial  Competitiveness Index, Belarus - 56th). At the same time, smaller  economies, such as Kyrgyzstan (115th) and Tajikistan (121st), produce  virtually no high-processed goods, demonstrating the vulnerability of  their industrial sectors. Common problems for most countries remain  the low share of high-tech products in the structure of output and  exports and insufficient export diversification. Export deliveries  continue to be dominated by low-processed goods (first stage of  processing) with low added value - semi-finished metallurgy, basic  chemicals, petroleum products, etc. Together, these form the basis of  the region's foreign trade, which keeps it on the periphery of global  industrial expansion. Exceptions are isolated cases: for example, in  Armenia and Belarus, a significant portion of exports already  consists of higher-processed goods - this is facilitated by access to  the capacious Russian market.