The 15th Annual Conference of the Armenian Economic Association (AEA) brought together over 100 economists and researchers from leading universities around the world. Held at the American University of Armenia (AUA) from June 30 to July 2, the three-day event concluded with a panel discussion titled: “Does Inequality Challenge Growth?”

Mediamax presents the goals of the conference and key moments from the discussion.

Armenia as part of the global research landscape

The conference addressed a broad range of topics relevant to economists – from microeconomics to macroeconomics, and from theoretical approaches to applied research. According to Dr. Gurgen Aslanyan, President of the Armenian Economic Association and AUA’s MSE Program Chair, the annual conference aims to bring globally relevant topics into Armenia, while encouraging the participation of as many Armenian researchers as possible.

“Thanks to this conference, international researchers become familiar with Armenia’s economic context, study its interesting cases, and eventually produce work that contribute to the policymaking in Armenia,” he said, adding that the meetings foster practical ties and knowledge exchange between Armenian and international scholars.

This year, the conference welcomed leading economists from Princeton University, Cornell University, the University of Chicago, McGill University, and several other world-renowned institutions. According to Aslanyan, students were also encouraged to participate – both from Armenia and abroad.

“Students come to Armenia from universities around the world for this conference, which means that the new generation of economists is already becoming friends with Armenia and gaining familiarity with its economy,” he added.

The goals and impact of the conference align with AUA’s broader vision of contributing to the advancement of economic research in Armenia and raising it to internationally competitive standards.

Data-driven policymaking

Dr. Ruben Enikolopov, Professor at Pompeu Fabra University (Barcelona, Spain) and Academic Director of the Yerevan Economic School (YES), emphasized the vital role of research in todays’ world.

“We live in a reality where human capital determines the comparative advantage of countries. In this regard, Armenia is unique because its strong human capital is one of its main strengths. We need to develop this further,” he noted.

He also added that policymaking can no longer rely on merely guesses – both governments and businesses need serious, data-driven, analytical approaches. That is one of the reasons why conferences and similar events are important for building Armenia’s research potential and integrating it into global academic trends.

According to Enikolopov, the logical continuation of the conference is the summer school held in Dilijan for young economists. It is organized by YES in partnership with the University of Chicago. 

Does inequality hinder or support growth?

The closing panel discussion focused on the interrelationship between growth and equality. 

Dr. Vache Gabrielyan, Dean of the Manoogian Simone College of Business and Economics at AUA, emphasized that growth and inclusivity are sometimes mutually exclusive.

“If we take purely microeconomic approach, we will see that one can often maximize growth without inclusivity. Most policymakers are looking at inclusivity not as a growth-enhancing strategy, but as a political issue they need to solve,” he said.

There are many interesting studies on the topic, but Gabrielyan highlighted the research by Dr. Abhijit Banerjee and Dr. Esther Duflo, that concludes – both too much equality and too much inequality can hinder growth.

“In about 80% of countries the Gini coefficient (author – measures income inequality within a population) ranges from 0.25 to 0.40 (author- 0: absolutely equal, 1: absolutely unequal). Armenia is also within that range, in a quite good neighborhood. For instance, during China’s period of rapid growth, its Gini coefficient was around 0.41–0.42. The United States is always tittering around 0.40. This shows that growth is possible, and the key issue is how to make it more inclusive and equitable. If that is not done, longer-term problems arise related to instability and democratic government. More simply, as education becomes widely accessible, we may experience what Peter Turchin calls ‘overproduction of elites.’ On the other hand, if growth is not inclusive and the fruits of growth are not accessible to most people, then that can undermine the stability of the country,” Gabrielyan concluded, noting that growth and equality, while connected, often are seen as separate, not always coinciding tasks.

The fruits of growth are not reaching the poor

Lea Hakim, Senior Country Economist for Armenia at the World Bank, addressed the factors that are undermining inclusive growth in Armenia. She stressed that despite progress, poverty remains relatively high given the country’s middle income level.

“We also see that poverty reduction has not been consistent. For example, in 2023, the real economic growth was 8.3%, and yet poverty increased a little bit. What this is pointing to is that GDP growth is not properly transmitted to the well-being of the poor,” she stressed.

According to Hakim, persistent poverty is also driven by unequal access to education, employment, and income in rural communities, compared to Yerevan, where most jobs remain concentrated.

Unequal opportunities due to place of birth

Continuing the discussion on inequality, panelists emphasized the critical role of education. Dr. Steven Durlauf, Professor of Economics at the University of Chicago, pointed out that in the United States, educational inequality stems from several key factors –starting with the unique way public education is financed.

“About 40% of the revenue spent on public schools between ages 5 and 17 are generated locally. So the United States is broken up into something on the order of 14,000 school districts, and these school districts generate money, so there are huge disparities in the amount of money spent between districts.,” Dr. Durlauf explained. 

He added that these disparities deepen when the socioeconomic conditions of neighborhoods dictate how funds are allocated – such as in high-crime areas where resources meant for education are diverted to security and support services that merely make education possible.

According to the economist, another reason for educational inequality is the “symbolic universe” in which a person grows up.

“At the University of North Dakota, I met a professor of medicine who had a PhD in medicine from Harvard University. He told his story: while studying at Arizona State University, he was especially ahead in the subject of biochemistry. His professor called him and told that he should enter medical school, to which he responded: ‘I did not know Indians could be doctors.’ His professor, of course, found a wise answer, helping him later become a doctor, but with this example I want to show that depending on the characteristics of the environments in which people grow up, the potentialities that exist in their head can be profoundly different,” Dr. Durlauf explained.

Supporting parents in child’s early education

Adding to the discussion, Dr. Ariel Kalil, Professor of Economics at the University of Chicago, stressed the central role of parents and families in early childhood education. According to her, neither preschools nor schools alone can fully take on the responsibility of equipping children with the foundational skills and knowledge formed in the early years. Parents should be highly involved in this issue, and appropriate institutions should be established to support them. 

“Yesterday, I was really struck by a conversation with my Armenian guide. She told me she had lived in the U.S. for ten years, and another six in Canada, but returned to Armenia a few years ago to care for her mother – because in Armenian culture, it not not acceptable to place your aging parent in a nursing home. That really touched me, and I think this is equally important in the U.S. I believe we need to think about how to support everyone in contributing to the development of children,” Dr. Kalil said.

During the panel, attendees also had the chance to ask questions to the speakers, sparking a dynamic exchange that brought theoretical reflections into dialogue with real-world experience.

Gaiane Yenokian

Photos by Agape Grigoryan