Executive summary

The Republic of Armenia has one of the highest emigration rates in the world, with about 30% of the population living outside the country. Inevitably, international migration has been playing a significant role, both positively and negatively, for the country’s development and the government is devoting more attention to this phenomenon. The 2014-2025 Strategic Program of Prospective Development underscores the links between migration and development. The key question now is how to create a favourable policy environment to make migration work for development. The Interrelations between Public Policies, Migration and Development (IPPMD) project – managed by the OECD Development Centre and co-financed by the European Union – was conceived to enable this discussion in Armenia. The IPPMD project explores:

  1. how migration’s multiple dimensions (emigration, remittances, return migration) affect some key sectors for development, including the labour market, agriculture, education, and investment and financial services

  2. how public policies in these sectors enhance, or undermine, the development impact of migration.

This report summarises the findings and main policy recommendations stemming from empirical research conducted between 2013 and 2017 in collaboration with the Caucasus Research Resource Center (CRRC-Armenia) and the State Migration Service under the Ministry of Territorial Administration and Development. Data were gathered from a survey of 2 000 households, interviews with 79 local authorities and community leaders, and 47 in-depth stakeholder interviews across Armenia. Robust analysis, accounting for Armenian political, economic and social contexts, sheds new light on the complex relationship between migration and sectoral policies.

Policy coherence is critical to make migration work for development

The research findings provide evidence of the links between migration and a range of key development indicators in Armenia. Various dimensions of migration – emigration, remittances and return migration – have both positive and negative effects on key sectors of the Armenian economy. Similarly, sectoral policies have unexpected and sometimes contradictory impacts on migration and its role in development.

Labour market policies tend to curb emigration

While emigration negatively affects households’ labour force participation through remittances, the additional income received from emigrants encourages self-employment, notably of women in rural areas. Furthermore, return migration in rural areas also seems to boost self-employment. In turn, how do Armenian labour market policies affect migration? The IPPMD research found that active labour market policies can influence migration decisions of individuals and households. Vocational training programmes, for instance, tend to curb emigration in Armenia unlike the other IPPMD partner countries’ general pattern. Only 7% of people who participated in a vocational training programme have plans to emigrate, compared to 12% of non-participants. Most Armenian emigrants come from low-skilled occupations in agriculture and construction. Given that the propensity to emigrate is higher among the lowest skilled occupational groups, such training programmes could be promoting upward labour mobility and reducing incentives to look for jobs abroad. The IPPMD research also finds that government employment agencies can curb emigration by providing people with better information on the Armenian labour market.

Agricultural subsidies influence households’ migration decisions

Agricultural households in Armenia are more likely to be receiving remittances than non-agricultural households, and this additional income is often spent on agricultural assets. However, it appears that the amounts invested are not high enough to revitalise the agricultural sector, or the rural sector in general. For instance, there is very little evidence of diversification into various agricultural activities or non-agricultural business by farming households. The IPPMD analysis also finds that agricultural policies may be discouraging emigration by members of farming households and encouraging current emigrants to return. Individuals in households benefiting from agricultural subsidies are less likely to emigrate or be planning to emigrate. In addition, households receiving agricultural subsidies were more likely to have a return migrant. By providing households with the means to relieve the financial constraints which may have driven a member to leave, subsidies may be providing an incentive for emigrants to return home.

Remittances encourage investments in education

The IPPMD analysis confirms that remittances stimulate more investment in education. In addition, a higher share of female-headed households (14%) invests in children’s schooling than male-headed households (8%). Migration however, may have disruptive effects on youth school attendance. Both return migration and emigration seem to be negatively associated with school attendance, by girls in particular. The Government of Armenia has implemented multiple programmes to improve and strengthen the education sector in the past two decades. The IPPMD project found that existing education programmes, however, have little impact on household migration decisions, probably because they mainly involve in-kind support and are of fairly limited coverage.

Investment is not being boosted by migration

Armenia has a healthy and open investment climate and a supportive environment for business start-ups. However, the IPPMD research finds a low level of business ownership by households with and without migration experiences alike. Furthermore, the link between households’ business ownership and remittances appears to be negative: remittance-receiving households are less likely to own a business. Potential reasons for this finding are the low level of financial inclusion of the population and the rather underdeveloped financial markets, especially in rural areas. For instance, the IPPMD survey found that 96% of urban communities have a bank compared to only 2% of rural communities. Moreover, participation in financial training programmes is very low among migrant and non-migrant households alike: less than 1% of surveyed households benefited from a financial training programme. Expanding access to the formal financial sector and financial training programmes may help people send and receive more remittances, and to do so through formal channels.

The way forward: Integrate migration into sectoral and national development strategies

Migration can benefit Armenia’s economic and social development, but its potential is not yet fully realised. Although Armenia’s numerous strategic documents have included migration, the scope of inclusion is still rather low. Furthermore, many sectoral policy makers do not yet sufficiently take migration into account in their respective policy areas. A more coherent policy framework across ministries and at different levels of government would make the most of migration. Migration needs to be considered in the design, implementation, monitoring and evaluation of relevant sectoral development policies. For example:

  • Employment agencies could reach out to both current emigrants abroad and migrants who have returned.

  • Agricultural subsidies could be conditional on subsequent yields rather than being provided in advance.

  • Cash and in-kind distribution programmes could be expanded in areas with high emigration rates to encourage young people to complete secondary education.

  • A national financial literacy programme would enable Armenians in general, and migrants and their families in particular, to invest remittances more productively.