Real Economic Diversification Requires Reshaping Production, Not Just Finding New Markets

In this sharp critique, Hrant Mikaelian challenges the government’s framing of economic diversification as simply redirecting Armenian agricultural exports from Russia to European markets. He argues this represents a fundamental misunderstanding of what economic diversification actually requires. According to Mikaelian, true diversification begins with diversifying the productive base itself-what Armenia actually makes and the competencies it develops-and only after that foundation is established can a country successfully enter new export markets. The problem, he argues, is that Armenia’s export portfolio remains primitive and narrowly concentrated in low-value agricultural goods like apricots. These goods may have found ready markets in Russia due to geographic proximity and cultural familiarity, but they cannot compete in European markets, which face different tariff regimes, quality standards, non-tariff barriers, and prefer locally produced alternatives. Mikaelian notes that Russia, by May 2026, was essentially buying whatever Armenia could produce-the constraint was not Russian demand but Armenian supply capacity. This created an almost unlimited market opportunity that Armenia failed to maximize by investing in industrial production and manufacturing competitiveness. Now, facing Russian restrictions, Armenia’s government proposes simply finding another buyer for the same primitive exports, rather than fundamentally transforming the productive economy. His analysis implies that without substantial industrial investment, workforce training, technology development, and structural economic change, Armenia cannot realistically replace Russian markets with European ones. The diversification needed is one of decades, not months or years, and requires building entirely new sectors and production capabilities.