Armenia's Economic Pulse

[Haykakan]

Re: Armenia's Economic Pulse

I am working on my economic environment midterm exam and one of the subjects on the test deals with economic protectionism. This subject rings a loud bell for me because we were discussing not long ago if opening the border with turcky would be a good or bad thing for Armenias economy. The fact is south american countries chose erecting barriers to trade and their economies failed while south east asian countries removed trade barriors and prospered. Errecting trade barriors will force other countries to act in kind thus limiting the revanue a business can generate. Allowing foreighn goods in will force domestic companies to be more efficient thus providing the consumer with better products and prices. I understand that many have issues with doing business with the country that tried to erradicate you, i have a problem with that myself thus i boycott turckish goods here in the usa but for armenia's businesss the turckish market provides a huge source of revanue which is good for our country. Armenians have been a business savy bunch since the days of the silk road and we will find the way to succeed even in enemy territory, as a matter of fact it is already being done. My point is that there is no reason to underestimate our peoples ability to compete in the open markets as a matter of fact we armenians have a long history of success in such situations.

[levon]

Re: Armenia's Economic Pulse

. Allowing foreighn goods in will force domestic companies to be more efficient thus providing the consumer with better products and prices.

OR, Turkey will just heavily subsidize all exports headed for Armenia, thus collapsing the ability of any Armenian domestic company to compete with Turkish imports. Turks already spend a lot of money on genocide denial. It would be naive to think that they wouldn't start putting heavy economic pressure on Armenia. They wouldn't need much capital to do that. One they run domestic companies out of business, they can reduce the subsidies and still have market monopoly.

East Asian countries can eradicate trade barriers because they don't trade with countries that are very likely to be hostile. Hostility need not come in military terms. That's something Turkey is not likely to attempt. But if trade barriers are taken away they will most likely put heavy subsidies in place for their exports (headed to Armenia) just to further weaken the Armenian economy.

You're right, there will be some business saavy Armenians that will make huge profits from the whole ordeal, but in the long run, our domestic production will drop and we'll be completely dependent on cheap Turkish imports. For Turkey, that would be a much better position than any military victory.

Futhermore, Turkey, with it's large population will not be affected by Armenian imports, but Armenia, with it's small population has the potential to be heavily impacted (in the negative direction).

The only way I can see it working if trade barriers are in place to ensure domestic companies will have an edge against Turkish imports.

[Haykakan]

Re: Armenia's Economic Pulse

Free trade is a two way street. If the other side is subsidizing then it is no longer free trade. Armenia is already flooded with cheap turckish goods thus turckey already has a foothold in our market. When it comes to who has more to gain by open borders and free trade the answer is easily Armenia because it opens up not just the turckish market for our businesss but also cheap transit routes to europe for both cargo and people. Considering its small size, Armenia has much to offer in free markets. From electricity to the turcks to quality produce like apricotts to alchohol products... there is a long list of things we can turn into revanue in open markets if we can get the products to them in a cheap and timely fashion. The demand is there already and for a small country like ours, capturing even a small part of a market can mean prosperity for our people.

[levon]

Re: Armenia's Economic Pulse

Free trade is a two way street. If the other side is subsidizing then it is no longer free trade. Armenia is already flooded with cheap turckish goods thus turckey already has a foothold in our market. When it comes to who has more to gain by open borders and free trade the answer is easily Armenia because it opens up not just the turckish market for our businesss but also cheap transit routes to europe for both cargo and people. Considering its small size, Armenia has much to offer in free markets. From electricity to the turcks to quality produce like apricotts to alchohol products... there is a long list of things we can turn into revanue in open markets if we can get the products to them in a cheap and timely fashion. The demand is there already and for a small country like ours, capturing even a small part of a market can mean prosperity for our people.

You might want to shift your view from the theoretical to practical, as obviously you fail to see what Turkish intentions are. It is true that there are cheap Turkish goods in Armenia, but they are not as easy to import, and have to be routed through Iran or Russia/Georgia; thus, do not pose much of a threat to Armenia. However, if the borders were open, these goods would pour freely into the Armenian markets.

You're also completely confused on what constitutes free trade. The term means that no tariffs are applied when the goods are imported into the country, it has not provisions on preventing and regulating subsidies. For your reference, US subsidies for farmers exceed 20%. You are confusing it with "Fair trade".

Turkey can and will have subsidies. In fact, it already heavily subsidizes agricultural production, to the point that local Belgian farmers are quickly running out of business. If you think that won't happen to Armenia, then you must be truly out of your mind.

This isn't about what Armenia can offer. It's about how Turkey can and will flood Armenia with cheap imports to the points that local production will stop.

[Haykakan]

Re: Armenia's Economic Pulse

Subsidies can work both ways to. Turckish goods are all over Armenia which means bringing it in is no big deal. When i went to the yarmerka there were more turckish goods then anything else. There is no dought that economicaly opening the border will do a great deal of good for our country, that is why Armenia.s government wants it open and it is the turckish government that is keeping it closed because we have more to gain then they do.

[levon]

Re: Armenia's Economic Pulse

Subsidies can work both ways to. Turckish goods are all over Armenia which means bringing it in is no big deal. When i went to the yarmerka there were more turckish goods then anything else. There is no dought that economicaly opening the border will do a great deal of good for our country, that is why Armenia.s government wants it open and it is the turckish government that is keeping it closed because we have more to gain then they do.

Of coarse, subsidies can work both ways; however, Turkish economy is much larger than the Armenian economy, so they can subsidize to a much larger degree. If our history with Turks has taught us anything, it is that they cannot be trusted, and any time they have power to do us damage, they will.

You also fail to realize that whatever the Turkish goods in Armenia, they were probably imported through Iran, and as a result Turkey cannot put large subsidies on them as they are not necessarily headed for Armenia. However, if the border was open, they will be able to export whatever they want with heavy subsidies.

And don't be fooled, who said that Armenian govt wants open borders with Turkey. From what it seems, they were just playing a game to keep the West happy. Turks don't want open borders, not because it won't benefit them, but because many are too blinded with hate to realize that open borders means they can exert a lot of economic pressure on Armenia.

[Haykakan]

Re: Armenia's Economic Pulse

Of coarse, subsidies can work both ways; however, Turkish economy is much larger than the Armenian economy, so they can subsidize to a much larger degree. If our history with Turks has taught us anything, it is that they cannot be trusted, and any time they have power to do us damage, they will.

You also fail to realize that whatever the Turkish goods in Armenia, they were probably imported through Iran, and as a result Turkey cannot put large subsidies on them as they are not necessarily headed for Armenia. However, if the border was open, they will be able to export whatever they want with heavy subsidies.

And don't be fooled, who said that Armenian govt wants open borders with Turkey. From what it seems, they were just playing a game to keep the West happy. Turks don't want open borders, not because it won't benefit them, but because many are too blinded with hate to realize that open borders means they can exert a lot of economic pressure on Armenia.

I have written extensively on this subject and asked you before to read those posts but... Yes they were playing a game it was a game that armenia could not lose. Had the borders been opened Armenia would win (economicaly) and if the borders stayed closed Armenia would win again because it is obviously Turckys fault and Turcky looks bad in the international arena while Armenia gets points and sypathy for having tried its best. Russia is the biggest player in all this as the latest developments confirm this point, but since i been over all this before i wont go over it again and agian and again.... Open border with the turcks will significently benefit both sides but the benefits would be much more for Armenia. Getting execc to a large market like turcky will without a dought increase revanue for armenian businesses despite any subsidy plan the turcks or anyone else can dream up. In addition the open border will allow our business not just into turckys market but it will open up markets to many other places since shipping and traveling to other destinations will be much cheaper with a lot more options. Armenians are very familiar with trade, despite being behind the iron curtain for a long time. We can compete with the best and succeed and much of the fears about open borders are based on irretional fears or some other agendas. The moral issues behind opening borders with the denialist turcks is much more of problem, the economic question is not a question at all, open borders are without question a slam dunk win for the Armenian side economically speaking.

[levon]

Re: Armenia's Economic Pulse

asked you before to read those posts but...

You have never asked me to read up your old posts on this subject.

Had the borders been opened Armenia would win (economicaly)

This is not a clear conclusion. State the evidence that suggests Armenia would win economically if the borders are opened.

Open border with the turcks will significently benefit both sides but the benefits would be much more for Armenia.

Yes, there will be benefits, though it's not clear if the benefits will go to a select few, or to the entire nation.

Getting execc to a large market like turcky will without a dought increase revanue for armenian businesses

That's only natural to expect.

despite any subsidy plan the turcks or anyone else can dream up.

Please provide evidence that support your point of view. Turkey's subsidies have already done great damage in some European countries, what evidence do you have to support that the same won't happen in Armenia

open borders are without question a slam dunk win for the Armenian side economically speaking.

That's your opinion, you have again not supported your opinion with facts, and no I won't go search around for your previous posts as they are likely to be as full of errors and void of evidence as this post of yours.

[Haykakan]

Re: Armenia's Economic Pulse

Some basic economic facts will easily answer your questions. The most important thing to a business is revanue which is much more readily available in a much bigger marketplace. Economic subsidies cannot be placed on everything because it will hurt efficiency and quality of goods being produced and result in a competative disadvantage in the long run. Subsidies can be countered by doing the same in your market or banning subsidised goods from enering the country. There are effective and efficient ways of countering subsidies and tarriffs. Access to markets which will increase revanue is the biggest economic factor to consider. Should turckey try its tricks we can counter them or worst case scenerio we can close the border if need be. Once business starts flowing it will be in no ones interest to stop it thus the flow will only get bigger and this will create social changes which will bring the people of both countries closer togather. The real question as i stated before is not if there is a economic benefit to Armenia but is making business partners and eventually friends with the country that tried to exterminate you and continues to deny it the right thing to do? You have to weigh what is more important in this case-the economic benefits and eventual security (both physical and economic) or the moral principle involved here. It is not a easy decision to make as one may think because there is a strong moral principle telling you to do what is best for your country and people and engage the long time enemy for mutual benefits and a better future vs the the moral principle of how can i do business and make friends with the people who killed, robbed, raped, ... my people. O and levon if your not willing to go back and read what i had written then why in hells name should i go through the trouble of providing you with proof? If you dont believe what i say well then i couldnt care less. There is plenty of evidence out there like when the south american countries decided to close their markets to foreighn competition and ended up with total economic failure vs the countries of se asia which embraced open markets and thrived. The evidence is all there but i have better things to do then spoonfeeding a annoying crybaby.

[levon]

Re: Armenia's Economic Pulse

The evidence is all there but i have better things to do then spoonfeeding a annoying crybaby.

You're right, there is plenty of evidence there that indicates that when an economically superior country opens borders and engages in free trade with an economically weaker country, the stronger country sees great benefits, while the weaker country just gets exploited.

It is true that on the long run heavily subsidizing exports can hurt the economy, but compared to the economy of Armenia, Turkey has a much stronger economy and can afford to subsidize exports just to exert economic pressure on Armenia. It is entirely possible that Turkey will do all in its power to hurt Armenia in every way possible. If this was about mutual benefits, Turkey would have long stopped its campaign of denial, but it hasn't. It's only naive to assume that now Turkey will somehow change it's mind and approach Armenia from a position of mutual friendship.

Furthermore, please explain how you will effectively counter subsidized goods entering the Armenian market place. Subsidizing local production will only push the Armenian economy into chaos, as it's not strong enough to compete with the Turkish economy. On the other hand, banning subsidized products from entering the economy will likely lead to the closing of the border. Either way, it's not a win-win situation.

And you ask why I ask for references when I won't read your previous posts? The reason being is that a statement "go back and read my previous posts" does not in any way provide any references by itself. If you specifically point me to a post, that would be enough, but a general statement such as yours leaves me entirely justified to write what I wrote before.