Bright prospect

The Belt and Road Initiative offers Armenia a new opportunity for economic development

The fourth industrial revolution ushered in by digital innovation appears to have opened a new chapter in human history. More and more people have started to enjoy the benefits of new technologies in all spheres of life, from daily communications to medicine and education. However, not everyone equally benefits from these developments. If societies in the developed world are moving forward rapidly, billions of people in developing countries still suffer from inadequate access to necessities such as clean water, electricity, medicine, and education.

Many in the Global South hoped that the developed world would come up with projects and initiatives to help overcome the staggering gap between rich and poor countries and, by doing so, pay the debts for centuries-long colonization, the slave trade, and other egregious violations of human rights, perpetuated by Europeans in Africa, Asia, and Latin America. However, the new vision for the developing world came from within.

In September 2013, Chinese President Xi Jinping announced the launch of the Belt and Road Initiative. The initiative envisaged massive investments in developing countries' physical and digital infrastructure to construct new or modernize existing highways, railroads, airports, electricity generation and transmission systems.

Since the beginning of the 21st Century, China has been the leader of the developing world in terms of economic growth, raising hundreds of millions of people out of abject poverty and making China the number one country in the world measured in terms of purchasing power parity. China's astonishing economic growth and its people-centric policy, aimed at increasing the living standards of ordinary people, resonated well with billions in other developing countries. Thus, when China came up with the Belt and Road Initiative, many countries of the Global South looked to it with enthusiasm, viewing it as a reliable instrument to overcome poverty and economic downturn. The initiative became an alternative source of funding for the developing world, which previously only had the option of receiving funding from the World Bank, the International Monetary Fund and other Western-controlled institutions, whose economic and credit packages came with many strings attached, including interference in the political and economic decision-making of the states concerned.

As a newly independent, developing country, Armenia is situated well to benefit from the Belt and Road Initiative. As one of the world's ancient civilizations, Armenia played an important role in the functioning of the ancient Silk Road. Its medieval capital Ani was situated along the road connecting Asia with Europe.

Armenia launched a series of economic reforms after gaining independence in 1991. Passing through the difficult transition period in the early 1990s, Armenia stabilized its economic situation in the 2000s. It registered an impressive economic performance of an average of 6.5 percent GDP growth in 2017-19 and staggering 13 percent GDP growth in 2022, overcoming the COVID-19-related decline.

In 2017, China launched the Digital Silk Road, adding a new dimension to the Belt and Road Initiative. The program aims to boost digital connectivity among participants and provide the developing world with the necessary digital tools to foster economic development. Digital infrastructure is becoming even more essential to modern economies with the arrival of faster networks, cheaper sensors, and the proliferation of connected devices.

In this context, fostering economic relations with China may be crucial to boosting Armenia's economy. The development of Armenia-China economic relations aligns with the win-win international cooperation philosophy put forward by China.

In recent years information technology has become the main locomotive of Armenian economic growth, gradually transforming Armenia into a regional tech hub. The branches of some of the world's top IT companies, such as Synopsys, Nvidia and others, are operating in Armenia. In recent years, an ecosystem of Armenian startups was created in Armenia, with some of them receiving worldwide recognition. In August 2021, Picsart became a new unicorn of the tech world, and Krisp, a digital noise cancellation app, is close to passing the threshold. In May 2021, Digital Pomegranate, a tech company based in Armenian second-biggest city of Gyumri, opened a Digital Silk Road center there, and established an office in Xi'an, Shaanxi province, becoming the first Armenian digital company to enter China's digital market.

The developing IT sector in Armenia requires a quick deployment of 5G networks, which will allow for the rapid growth of the internet of things. Chinese companies may play a primary role here. The borders Armenia shares with Georgia and Iran make it a favorable data transit country to connect Europe with the Middle East and Central and Southeast Asia. Meanwhile, Armenian IT companies can act as a bridge for foreign companies to enter the Chinese market. It creates another opportunity for Chinese IT companies to invest and produce in Armenia and later export to the Eurasian markets.

The launch of the Belt and Road Initiative offers Armenia a new opportunity for economic development. It fits well into Armenian efforts to diversify its foreign and economic policy, envisaging a new path for the country.

The author is the chairman of the Center for Political and Economic Strategic Studies in Yerevan, Armenia. The author contributed this article to China Watch, a think tank powered by China Daily.

Contact the editor at editor@chinawatch.cn.