Diaspora, external trade and FDI in South Caucasus countries Pavel Chistyakov, Russia (Centre for Strategic Research; Geographic department of Moscow State University)

What can excuse the Russian intervention to the topic?  არც ისე წვამს, როგორც ქუხს or “a fish can not be estimated in water”  Multiple fieldworks in all three countries  Sociologic research in in Moscow (links to diaspora, remittances, identity of migrants from South Caucasus)  Affection to South Caucasus

Geographic structure of export  >80% of Armenian export goes to countries where 70% Armenian diaspora lives  Near 60% of Georgian export is directed to countries bordering Georgia by land or by sea.  97% of Azerbaijan export is determined by oil contracts and configuration of pipelines 40%

Diaspora and sustainability of external trade  Liaisons with Diaspora provides higher sustainability of external trade compared to extreme dependency of oil export but it is more risky than diversified economic relations with neighbours  Armenia showed how diaspora can stimulate external trade during the period of rapid growth of the world economy. The future challenge is to elaborate mechanisms how diaspora can contribute during depressions

Diaspora inspires external trade: how it works and what should be done  Experience of Armenia 1) Diaspora raises demand “Nostalgic” (FMCG) “Corporate” (eg: metalls, chemicals) 2) Diaspora helps to reduce transaction costs of trade in foreign countries  Challenges for Azerbaijan 1) Structuring and moving out of “shadow” trade networks based on kinship 2)Collaborate with governments providing access to markets  Challenges for Georgia Exploring consumers’ preferences Dealing with institutions Establishing business- contacts

Geography of FDI: similar tendencies?  Armenia  Azerbaijan  Georgia >85% 70% 80%

Structure of FDI by economic sectors

Benefits and hazards of FDI made by diaspora  The key issue of policy towards diaspora’s investment activity is to keep balance between corporate and governmental interests SectorMain benefitMain hazard IndustryRise of productivity via technologic modernization Conservation of “heavy” structure of economy and dependency on raw market conditions EnergyReduction of accumulated depreciation of funds and risks of emergency Dependency on energy companies corporate policy TransportOpening borders of a countryLost control of strategic objects in politically not stable region Real estateStimuli for construction, industry and services Growth of real estate prices FinancesAvailability of credit resources and derivatives Risk of capital outflow

Consequences in Russia -+ Diaspora lobbies Diaspora spends Diaspora exports Reduction of migration Capital outflow

Universal outlines of diaspora-policy  Projecting of collective action institutions – online (eg: “diaspora-social network” project startup) and offline  Personalization as of liasons between object and subject of help – support of concrete people by concrete people/villiges/small projects  Creation of conditions for repatriation – temporary (eg: well qualified youth) and permanent (eg: pensioners)  Formalization of informal networks based on kinship. International development institutions should be mediators in process of Diaspora-Motherland interference due to higher level of trust to them compared to local governments.

Specification of the policy for South Caucasus countries considering cultural differences What can unite Diaspora and country MethodologyApproach to instruments ArmEthnicity & history To direct efforts of diaspora to reduction of dependency on diaspora Elaboration of the joint concept of interrelationships –exchange of commitments AzKinship, fellowship and traditions To develop “bridging” against bonding Regionalization of diaspora- policy - social networking with territorial linkage GeoSpiritual unityIndividualization and fragmentation of diaspora Shaping the set of event and economic contacts according to interests of key-persons The feeing of affiliation to the state

Thank You for Attention! Pavel Chistyakov, Russia (Centre for Strategic Research; Geographic department of Moscow State University)