Social Convergence, Inclusion and Poverty Reduction in Armenia

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Social Convergence, Inclusion and Poverty
Reduction in Armenia

• Vahram Avanesyan, Director, AVAG Solutions,
  Armenia.

Black Sea Conference on Regional Integration and
Inclusive Growth February 23-24, 2009
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Main facts about poverty reduction in Armenia

• In 1999 first comprehensive attempt to estimate
  poverty incidence reveled
• Over 56 of population is poor, and
• Over 27 leave in extreme poverty
• Between 1999 and 2007 poverty incidence in
  Armenia declined by more than two times
• In the same period extreme poverty declined by
  almost 7 times

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Main contributors to poverty reduction between
1999 -2007

• Strong economic growth
• Per capita GDP growth 2.4 times
• Growth elasticity of poverty 0.45
• Decline in income inequality
• Gini down by about two times
• Expansion and more targeted social protection
• Per capita social protection expenditures
  increased by 4.2 times
• Private Transfers from abroad up by 100

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Real GDP, Employment and real wage indices,
Armenia 1990-2008 and 2002-2008
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Income structure
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Income and Consumption Inequality trends
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Impact of social protection expenditures on
poverty
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Private transfers reduce poverty risk but rich
benefited more
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Social convergance in Republic of Armenia (
Region/Marze level)
Poverty by Region 1999
Poverty by Region 2007
STDEV-13.2 Min/Max gap- 46.5 percentage points
STDEV-5.5 Min/Max gap-18.4 percentage points
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Projected Impact of SDP social protection
policieson poverty
Actual
SDP Projections
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Poverty challenges posed by the crisis

• Scenario 1
• Protectionism
• Slow down of economic reforms
• Expansion of social protection beyond fiscal
  sustainability

• Scenario 2
• Accelerate and enhance economic reforms
• Provide more targeted social protection
  maintaining fiscal sustainability

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Poverty challenges posed by the crisis
First Scenario
Second Scenario
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Thank you