Air transport is an increasingly critical area for trade and trade facilitation. As such, our World Bank trade teams are always searching for global good practice and promising policy results.
This search recently brought us to Armenia, where an “Open Skies” policy has been in place since late 2013. For a country with a long legacy of tight regulations in its commercial aviation market, this new policy signaled a sharp break from tradition.
Although there are no single accepted definitions of Open Skies, it refers to a set of provisions typically agreed on a bilateral basis, that enable each party to set freely the number of flights, carriers, types of aircraft and destinations; but also pricing freedom, as well as establishing the conditions for fair competition and provisions for carriers to engage in commercial cooperation.
Armenia’ Open Skies policy is particularity important when considering the country’s historically limited connectivity with international markets – partly determined by geography, and partly determined by geopolitical considerations. Besides being landlocked, the country has open land borders with only two of its four neighboring countries.
About "Notes From the Field": With this occasional feature, we let World Bank professionals who are conducting interesting trade-related projects around the globe explain some of the challenges and triumphs of their day-to-day work. The views expressed here are personal and should not be attributed to the World Bank. All interviews have been edited for clarity.
The interview below was conducted with Gohar Gyulumyan, a Senior Economist in the World Bank’s Europe and Central Asia regional division of the Poverty Reduction and Economic Management (PREM) network. Her work has been strongly centered on economic development in Armenia, where she is now based in the country office. She spoke with us about her most recent work on trade facilitation and the removal of trade barriers, including what the recent government announcement to join the Eurasian Customs Union may mean for the Bank's work in the country in the future.
Diversification of a country’s exports – increasing both the number of products it produces and the destinations of those products – is considered part of the path to development. Many economists and policy-makers see export diversification as an important means for increasing employment and speeding growth. Diversification also makes growth more stable, as it provides protection against shocks; a country that exports many products will not be hit so hard when the price of one falls, and similarly, a nation that exports to a wide variety of destinations will be shielded against a recession in one of them.
But new evidence contributes to a body of work suggesting that countries with an abundance of natural resources might be more prone to export concentration during spurts of high natural-resource prices – mainly in products, but also to a milder extent in trading partners – leaving them more vulnerable to price swings.