January 23, 2013

Exploring Brain drain and the hydropower industry: Comparing Tajikistan and Armenia

 Introducing our newest International Fellow: 
By Agnethe Ellingsen

In the summer of 2011, a delegation of government officials from Tajikistan visited Armenia to learn about Armenia’s experience with developing its renewable energy potential. Today, the high potential of hydropower has attracted international organizations as well as international enterprises - such as Norwegian and Iranian ones - to contribute in different ways to the development of the hydropower industry in both countries. However, the high level of labor migration in both Armenia and Tajikistan raises an interesting question that has not been well researched: To what degree does brain drain have an impact on the development of the hydropower industry in Tajikistan and Armenia?As a Norwegian student, my interest in this question is especially strong, since Norwegian companies are running hydropower projects in both countries and their success or failure could depend on local capacity.

Tajikistan, the country with the highest hydropower potential in Central Asia, has only realized about 5 % of its potential. Tajikistan’s hydroelectric power plants account for 98% of its domestic electricity generation. Here you can see the Nurek dam, the tallest dam in the world.
Landlocked, one of the poorest countries in their respective parts of the former Soviet Union, surrounded by mountains, located in earthquake prone areas, and punished by war during the 90s; both Armenia and Tajikistan have faced an uphill battle in the economic transition that followed the breakup of the Soviet Union. Today, energy is seen as an important catalyst to the economic development of Armenia and Tajikistan. While Iran and Iranian enterprises are among the most active regional partners for both Tajikistan and Armenia in the hydropower industry, Norway and Norwegian enterprises are among the most active western actors in this sector. NorskEnergi  is a leading Norwegian consultant firm in the fields of energy, environment and safety, financing large and small projects on energy efficiency and greenhouse gas reductions, and often cooperates with the Norwegian Ministry of Foreign Affairs. Over the past few years, NorskEnergi has started small hydropower projects in both Tajikistan and Armenia. The support for renewable energy in developing countries is one of the priorities of Norwegian development politics today.
Through the activities of NorskEnergi and considering the fact that in 2006 the UN recognized the nexus between migration and development, I became interested to investigate that issue more extensive. This led finally to my idea of analyzing the effect of labor migration and brain drain on the development of the hydropower industry in Tajikistan and Armenia, as the hydropower industry is an important part of the economic development in both countries.

Armenia already has realized about 42% of its hydropower potential. Armenia’s hydroelectric power plants account for 33% of its domestic electricity generation.Here you can see how one of many small hydro power plants in Armenia are looking inside.

Although plenty of studies have been conducted on labor migration in Tajikistan and Armenia, the exact economic impact of labor migration on one specific industry or sector has not been clearly examined. Furthermore, the several reports on the hydropower potential and the development of hydropower industry in Armenia and Tajikistan fail to answer the WHO-questions: WHO is going to construct and build all those dams and small hydropower plants? WHO is going to manage the construction process? WHO will have the responsibility for the maintaining the installations? WHO is responsible from the first outline to the final purchaser of electricity? 
What almost all of the studies to a little extent are indicating, but not further discussing, is the lack of skilled work force in all areas connected to the development of the hydropower industry. The first results from my research in Tajikistan indicate that brain drain in Tajikistan seems to have a negative impact, especially on the maintaining of hydropower plants, which are usually financed by the international community. Furthermore, the situation in Armenia will be explored in the coming months.

Here you can see the reservoir of Nurek. Standing here, I got a feeling of Norway, since it looks so similar to my Norwegian fjords.

A little about myself: my name is Agnethe Ellingsen, and I am the new International Fellow at the Caucasus Research Resource Center in Yerevan. I am a current Norwegian master’s student at Humboldt University of Berlin in Central Asian and Caucasian studies with a major in Geography and Development. Before joining CRRC in Yerevan, I interned at the Eurasia Foundation of Central Asia in Dushanbe, where I began my research for the above-mentioned project. I am very excited to continue exploring this topic here in Armenia and share the final results I will obtain by the end of my stay!

January 14, 2013

Social Snapshot and Poverty in Armenia: Children are the Most Vulnerable

The National Statistical Service of the Republic of Armenia has recently published its annual statistical and analytical report “Social snapshot and poverty in Armenia”. The report is based on the results of the 2011 Integrated Living Conditions Survey (ILCS) of Households and intends to inform the public about the living conditions and social situation in Armenia. For researchers, students and any interested individual it provides the most comprehensive report and data set on social, economic and demographic issues in Armenia. According to ILCS estimations, the number of current population of Armenia is 2,927,600 people. The resident population comprises 48.6% males and 51.4% females, with an average age of 35.3 years.

The chapter on poverty profile and labor market situation presents detailed information on Armenia’s economic development in the period 2008-2011. Due to economic reforms implemented in the last decade before the global economic crisis, Armenia was able to join the group of middle economy countries. However, the Armenian economy underwent a deep recession in 2009 and real GDP dropped by 14.1%.A moderate recovery followed in 2010 and 2011, by 2.2% and 4.7%, respectively. The global economic crisis has also seriously undermined the government capacity to alleviate poverty. While the rich increased their wealth even further, the poor suffered the most and benefited less from the economic growth of the last two years.

In order to assess the level of well-being in Armenia, the report uses a consumption aggregate. Based on living standards, the population of Armenia is divided into poor and non-poor, with the poor further divided into poor, very poor and extremely poor.  In 2011 more than one third of population (35.0%) was poor, 19.9% was very poor, and 3.7% was extremely poor. A majority of the extremely poor are urban residents, which seems to suggest that subsistence agriculture plays an important role in safeguarding people from extreme poverty.  Overall, the real monthly consumption of the population as not recovered from the most recent recession and is 6.1% lower than it was in 2008. The report estimates that Armenia would need AMD 111.5 billion (or 3% of GDP) to overcome poverty, in addition to the resources already allocated to social assistance.

Child poverty remains a grave concern. Among all population groups, poverty incidence is highest among children, particularly in age groups of 0-5 years, 6-9 years, and 15-17 years, and lowest in the age group of 60-64 years. It is interesting to note, in contrast to old-age pensions and family benefits, child allowances do not make any significant difference to average child poverty rate,.The report estimates that without pension income the average extreme poverty rate would triple in the households with a relatively low consumption level.

As of 2011, 1.2 million people (out of 1.4 million economically active labor force) were employed, with 39% of them in the agricultural sector.The youth (15-29 years old) accounted for 21% of the employed and 42% of the unemployed population. It is estimated that half of the jobs (50.4%)are informal, which causes many problems for the social and financial situation in Armenia. Most significantly,the large share of informal economy undermines social protection and further economic growth in Armenia. On average, monthly earnings in 2011 equaled to AMD 74.408, which is 8.3% higher than in 2010. Men earn 1.6 times more than women.

The full report contains much more information on the economic and social situation in Armenia and contains interesting details for students and researchers alike. The full report can be found here, at the NSS website.