the challenges facing landlocked developing countries: a case study ...

ARMENIA
While Armenia’s central geographic position in the Caucasus
potentially allows it to serve as a regional crossroad like it did
prior to independence in 1991, this has not been possible over
the last decade due to conflicts with neighbors Turkey and
Azerbaijan and severely deteriorated infrastructure. Such
challenges have contributed to Armenia’s high transport costs,
which are significantly greater than those of most former
Soviet Union republics. One estimate of these costs,
calculated by the World Bank, suggests that if Armenia’s
average freight factor was that of the EU - 8 times less than
Armenia’s - it could save approximately US$100 million per
year. 34
The trade costs of conflict have been severe. Armenia’s
traditional trade route through Azerbaijan, which accounted
for over 85% of Armenian trade flows, was blockaded in 1991
as a result of the conflict over Nagoro-Karabakh. Shortly
thereafter the Turkish border was also closed to transport.
With transit corridors undeveloped to the south, Armenia was
forced to reroute nearly all of its trade through Georgia. This
too presented problems for Armenia when a ravaging civil war
broke out in Georgia. A recently developed corridor to Iran
has been witnessing an increased trade flow.
TRANSPORTATION INFRASTRUCTURE
Road
With the closure of the Azerbaijan rail corridor, most of
Armenia’s freight transit traffic has been rerouted to the road
corridor from Yerevan to Georgia. This increasing
dependence on the road network has been accompanied by
significant deterioration in the infrastructure, resulting from
years of neglect following independence. A 1998 European
Bank for Reconstruction and Development study estimated
that nearly 40% of Armenian roads were in need of immediate
BASIC INFORMATION
HDI Rank: 76
GDP per capita
2000 (PPP$): $2,559
Exports per capita
2000 (current USD): $118
Distance to port:
693km
Transport cost ratio
(1999): 0.29
Neighbors:
Azerbaijan, Georgia, Iran,
Turkey
Primary transit neighbor:
Georgia
Main trading partners (2001):
Imports: United States (16%)
Russia (11%)
Exports: Russia (20%)
United Kingdom (10%)
Primary Exports (2001):
Precious stones & metals (36%)
Prepared foodstuffs (14%)
Domestic Roads: poor
Transit Country Roads: poor
Domestic Rails:
Transit Country Rails:
repair. Many of these roads are considered to be so dilapidated that rehabilitation will soon
no longer be possible. The lack of upkeep has been aggravated by the country’s harsh
winters, extreme altitudes, and susceptibility to earthquakes such as the one that devastated
the country in 1988. In an attempt to address the deteriorated condition of the domestic road
system, Armenia initiated a US$16 million Highway Project and more recently, in 2000, a
US$40 million Transport Sector Project, both with assistance from the World Bank.
poor
poor
Transit Country Ports: poor
Neighboring Civil Conflict:
high
Relations w/ Neighbors: poor
34 The ratio of freight costs to merchandise value.
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