1. Hrant Bagratyan Turkey, Iran and Southern Caucasus – a comparative political and economic analysis Conference in Tsakhkadzor, Sept 2007

2. The place on the freedom map Free none Partly free Turkey Armenia Georgia Not free Azerbaijan Iran

3. The geo-economic positioning Political democracy and economic liberalism Georgia Political democracy and socialism None Political dictatorship and economic liberalism Turkey Armenia Political dictatorship and economic socialism Iran Azerbaijan

4. First: the statistics, 2005 ParametersWorldTurkeyIranArmGeoAz GDP, bln USD The Growth Population GNI, per capita GNI, per capita with PPP Inflation Budget deficit, as % to GDP 44465 - 6437 7011 10098 - 362.5 7.4 72.1 4750 9060 8.2 -1.4 189.8 5.9 68.3 2600 8480 13.4 7.4 4.9 13.9 3.0 1470 5880 0.6 -2 6.4 9.3 4.5 1320 3690 8.2 -1.8 12.6 26.4 8.4 1240 5960 5.4 -1.7 General

5. General comments -All countries are bellow of world’s average general economic indicators -The richest ones (Iran, Azerbaijan) as a rule have the worst marks but are progressing rapidly -Where the market reforms are implemented earlier (Turkey, Armenia), the economy is monetized on the higher level and the difference between current prices and prices with PPP is smaller -Armenia keeps unreasonable policy of super trifling inflation which is seriously damaging the export and development

6. A catch up growth: depends on comparing with The game with CPI Remittances: are there helping us? Capital flow: Armenia is financing others? Investments: Stephan’s statistical game. What about the others? The quality of the growth

7. World and the region ParametersTurkeyIranArmGeoAz Exports of g. and s. High-tech export, % Imports of g. and s. Resource balance Gross capital formation (% of GDP) Market capitalization GDP per unit of energy use 102709 1.5 121524 -18815 24.8 44.6 6.2 67319 1.9 57714 +9604 31.5 20.4 3.1 1323 0.7 1962 -639 29.7 0.9 5.6 2183 22.6 3033 -850 26.3 5.5 4.1 4215 0.8 5003 -788 37.8 - 2.5 External economic relations

8. Comments All countries are quite similar in terms of import (except fuel): food, machinery and mechanical equipments, chemical and pharmaceutical products, IT and telecommunication devices, All countries are totally different in terms of export (the only similarity here is the difference) Conclusion: Practically homogenous import and totally different export: a good reason for the regional cooperation

9. Comments Georgia – tremendous success in the production and exportation of High-tech Iran and Azerbaijan are a little bit spoiled by the mineral resources: the highest consumption of the energy per unit of GDP The result of the absence of the regional integration and cooperation in production – imperceptible volumes of machinery, chemical, pharmaceutical etc production and exportation

10. Comments Armenia – the worst figures for the export: only 27% of GDP. Countries praised economic growth doesn’t exist in reality. Export of goods and services – the only real prove of the any economic growth. Despite the GDP growth in 1996-2006 by 2.4 times the real exports growth was only by 44%: in 1996 the physical volume of the export made 296 mln USD. In 2006 it made 1323 mln. With the neutralization of export price increase (2.04 timed during 10 years) and dollars inflation the real export in 2006 was only 432 mln dollars. Armenia has the lowest level in the region of the export of high tech (0.7%). One of the lowest figures in the world

11. The internal orderliness and the corruption rescues Current budget revenues (included current grants) as % of GDP

12. Comments and synopsis note Armenia: dramatic increase of the shadow economy and corruption despite everyday talks around it Georgia: a real progress after rose revolution (the biggest tempos of improvement) Azerbaijan: improving systematically and positive impact of oil prices Iran: energy prices high impact but the administration

13. The drivers ParametersTurkeyIranArmGeoAz Structure of the economy Agriculture Industry/Manuf-ng Services 11.9 23.7/14.0 64.5 9.6 44.2/10.4 46.1 20.5 44.3/20.5 35.2 16.7 27.4/17.6 55.9 12.3 55.4/9.2 32.3 The structure of the economy (%)

14. Comments High level of employment in the agricultural production. As a result the biggest problem of the countries will be labour force. Situation in Turkey and Iran is relatively better Very low level of services (except Turkey and Georgia) Very low level of the manufacturing in the industrial output (except Turkey and Georgia) As of today Turkey and Georgia have the best position for the sustainable economic growth

15. Other economic synthesis Figures ParametersTurkeyIranArmeniaGeorgiaAzerbaij an External Debt(% of GNI) The level of dollarization Availability of the credit resources (117 c) Index of the econom. Freedom, Heritage 47.3 - 11.4 - 37.6 63.6 32 27 29.5 71.1 11 68 17.2 80.9 89 123

16. Entrepreneurship and life quality, 2005 ParametersTurkeyIranArmeniaGeorgiaAzerbaij an Private Property protection (117c) Market capitalization (% of GDP) Fixed line and mp sub-s Connection to the inter-t PC per 1000 inhab The salary level, USD The poverty l-l,% School enrollment, % n/a 44.6 868 222 52 27 89.3 n/a 20.4 384 103 109 n/a 95.2 65 0.9 260 53 66 145 51 78.8 92 5.5 337 39 42 113.2 55 86.7 77 n/a 397 81 23 124.6 49 84.5

17. Some qualitative issues Sustainability and Development ParametersTurkeyIranArmeniaGeorgiaAzerbaij an The economic freedom index (2006) The growth the competitiveness Index of the structural and institutional reforms The road transport Aviation Energy supply Income share held by lowest 20% - 6.0 - 5.1 2.26 3.44/79 3.1 1.8/76 3.6/93 3.7/81 7.6 2.98 3.25/86 3.03 3.3/48 3.6/90 1.7/114 6.3 3.51 3.64/69 2.67 4.2/26 5.1/41 3.3/93 7.4

18. Comments Georgia – the best performer for the last 5 years Turkey – very close to the western average Iran – the best performer in education Armenia – needs a modern policy in telecommunication Azerbaijan – didn’t find the right direction to spend money All of them – there are big reserves in the IT and modern technologies and good base to create a regional market

19. The main synthesis and conclusion 1. The countries of the region have the same problems 2. They have different advantages The reinforcement of the exchange between problems and advantages will accelerate a real, fast and sustainable economic growth: a good base for the regional cooperation, economic and political security

20. Comments The Economic independence for Armenia is in multiple dependence on surrounding and diversification of the economy. Armenia has to become a country Carrefour