To apply the Porter “Diamond Model” to the case of Armenia, a small and land‐locked economy, in order to draw conclusions about its current situation, future prospects and appropriate development policies.
The paper analyses the shape of the Armenian “National Diamond” drawing on published statistical data and the authors' familiarity with the country.
Although controversial, the “Diamond Model” provides a useful basis for making appropriate policy recommendations for fostering competitiveness. The authors conclude that while achieving the required legislative and institutional framework, market liberalization and a stable macroeconomic environment are necessary, they are not sufficient conditions for ensuring continued economic growth and the achievement of sustainable development. In particular, based on the “Diamond Model” framework, they advocate Government policies to attract foreign direct investment with the objective of creating new industrial “clusters”.
The case study demonstrates that, despite possible limitations, the “Diamond Model” provides a valuable starting‐point for analysing appropriate development policy in emerging markets such as Armenia.
This is the first case study of its type written about Armenia. It is of value not only as a guide to policy‐makers in Armenia but also as a model for development specialists and policy‐makers in other industrializing economies.
