About the Journal

The journal publishes scientific articles and studies in all fields of economics and welcomes submissions whether they be theoretical, applied, or orientated towards academics or policymakers. The journal accepts original articles and comprehensive studies not previously published. The Editorial Board of the journal always looks into widening the range of the authors, inviting the researchers from universities all around the world.

Current Issue

Vol. 16 No. 2(46) (2025)
View Vol. 16 No. 2(46) (2025)
DOI: https://doi.org/10.46991/BYSU.G/2025.16.2
Published: 2025-12-24

Full Issue

Economic theory

  • Economic theory

    Human capital and the phenomenon of increasing returns in economic growth models

    Firuza Mayilyan
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    Abstract

     

    The paper investigates the historical preconditions underlying the emergence of the concept of the principle of diminishing returns to factors of production. An analysis of the manifestation of this principle in the scope of all factors of production is carried out. In light of the analysis of the characteristics of human capital, an approach has been proposed in which the principle of diminishing marginal returns is not applicable to investments in human capital at the macroeconomic level in the long run. Human capital generates increasing returns on investment while alleviating the impact of diminishing returns on other factors of production.

    In general, while accepting the principle of diminishing returns to factors of production, it should be noted that the mechanical extension of this principle to all types of economic activity is not scientifically justified. There are certain types of activities and economic sectors to which, in our opinion, this law does not apply. Moreover, these types of activities hinder the manifestation of the principle of diminishing returns to other factors of production. In particular, it is known that increased investment leads to diminishing returns on investment. However, this pattern applies to investment in physical capital. In our opinion, this pattern does not apply to investment in human capital. Moreover, investment in human capital is presumably expected to provide increasing returns. However, it should be emphasized that this approach lacks a clear system of evidence and is based on empirical observations. Furthermore, the principle of increasing returns to investment in human capital has a long-term lag in its impact on economic variables and manifests itself in the long term and primarily at the macro level.

    References

    1. Kondratiev N.D., "Problems of Economic Dynamics," Moscow, Economics, 1989.

    2. Mayilyan F.N., "The Role of Social Capital in the Process of Formation and Implementation of Human Capital," Bulletin of Tomsk State University, 2012, No. 1(17), pp. 21-62.

    3. Mayilyan F.N., "The Indicator of Total Factor Productivity as an Indicator of Inclusive Economic Growth," Armenian Economic Journal, No. 1, 2019.

    4. Malthus T.R., "An Essay on the Principle of Population," Translated by P.A. Bibikov, St. Petersburg, 1868.

    5. Marshall A., "Principles of Economic Science," Publisher: Progress, 1993.

    6. Rumyantsev A.M., "Economic Encyclopedia. Political Economy (in 4 volumes)," Moscow: Soviet Encyclopedia, 1972.

    7. Todaro M.P., "Economic Development," translated from English, edited by S.M. Yakovlev, L.Z. Zevin, Moscow: Unity, 1997.

    8. Sharaev Y.V., "The Theory of Economic Growth: An educational manual for Universities," Moscow: Publishing House of the Higher School of Economics, 2006.

    9. Acemoglu D., "A Microfoundation for social Increasing Returns in Human Capital Accumulation," The Quarterly Journal of Economics, Vol. 111, No. 3, 1996. pp. 779–804.

    10. Arrow K. J. The Economic Implications of Learning by Doing // Review of Economic Studies. 1962. Vol. 29. № 1.

    11. Becker G. S., Murphy K. M., Tamura R., "Human capital, fertility, and economic growth," Journal of political economy, Vol. 98, No. 5 Part 2, 1990. pp. S12-S37.

    12. Denison E., "Education, economic growth, and gaps in information," Journal of Political Economy, Vol. 70, No. 5, 1962. pp. 124-128.

    13. Diana R. Galoyan, Firuza N. Mayilyan, Yevgenya A. Bazinyan, Manuk E. Movsisyan & Alik A. Torosyan. Triple Exploitation of Human Capital in Developing Countries. ESG Management of the Development of the Green Economy in Central Asia, pp 375–383.

    14. Jones B.F. (2014) ]e Human Capital Stock: A Generalized Approach. American Economic Review, vol. 104, iss. 11, pp. 3752–3777.

    15. Jones B.F. (2019) “Human Capital Stock: A Generalized Approach: Reply. American Economic Review, vol. 109, iss. 3, 1175–1195.

    16. Lucas R. E., Jr. On the Mechanics of Economic Development // Journal of Monetary Economics. 1988. Vol. 22. № 1.

    17. Manuelli R.E., Seshadri A. (2014) Human Capital and the Wealth of Nations. American Economic Review, vol. 104, iss. 9, pp. 2736–2762.

    18. Mankiw G., Romer D., Weil D. Contribution to the Empirics of Economic Growth // The Quarterly Journal of Economics. — 1992. — May (vol. 107, № 2).

    19. Mincer J. (1958) Investment in Human Capital and Personal Income Distribution. Journal of Political Economy, vol. 66, iss. 4, pp. 281–302.

    20. Nelson R. R., Phelps E. S., "Investment in humans, technological diffusion, and economic growth," The American economic review, Vol. 56, No. 1/2, 1966. pp. 69-75.

    21. Psacharopoulos G., Patrinos H. A. Returns to investment in education: a further update The World Bank // Policy Research Working Paper. 2002. Vol. 2881.

    22. Romer P. M., "Increasing returns and long-run growth," Journal of political economy, Vol. 94, No. 5, 1986. pp. 1002-1037.

    23. Romer P. M., "Capital, labor, and productivity," Brookings papers on economic activity. Microeconomics, Vol. 1990, No. №. 5, Part 2, 1990. pp. 337-367.

    24. Solow R.M., "A contribution to the theory of economic growth," The quarterly journal of economics, Vol. 70, No. 1, 1956. pp. 65-94.

    25. Uzawa H., "Optimal Technical Change in an Aggregative Model of Economic Growth," International Economic Review 1965. — Vol. 6, № 1. — P. 18—31, Vol. 6, No. 1, 1965. pp. 18-31.

    26. Маилян Ф.Н. Человеческий капитал в контексте принципа убы-вающей предельной отдачи, Журнал «Мир экономики и управления». 2021г; Том 21, N (2)., стр. 49-58.

    27. Маилян Ф.Н. Эффективная реализация человеческого капитала как важный фактор эконо¬ми¬ческого роста, Вестник Томского государственного университета . Эко¬номика, N2(30), Томск, 2015 г., Стр.27-35.

    28. Psacharopoulos G., Patrinos H.A. Returns to Investment in Education. A Decennial Review of the Global Literature: World Bank Group Policy Research Working Paper № 8402. 2018.

    29. Jones B.F. The Human Capital Stock: A Generalized Approach // The American Economic Review. 2014. Vol. 104. № 11. P. 3752–3777.

    30. Jedwab R., Romer P., Islam A. and Samaniego R. Human Capital Accumulation at Work: Estimates for the World and Implications for Development: World Bank Policy Research Working Paper № 9786. 2021.

    31. Demirguc-Kunt A., Torre I. Measuring Human Capital in Europe and Central Asia: World Bank Policy Research Working Paper № 9458. 2020.

International economics

  • International economics

    International Indices as Tools of Manipulation: A Critical Examination

    Karine R. Avetisyan, Gurgen A. Gasparyan, Anna A. Hmayakyan, Artashes M. Ghambaryan
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    Abstract

    International indices, such as the Human Development Index (HDI), Corruption Perceptions Index (CPI), Doing Business Index, Safety Index, Happiness Index, and others, are pivotal in assessing national performance across economic, social, and political domains, influencing investment, policy, and global perceptions. However, their methodologies are vulnerable to manipulation through subjective criteria, selective data sources, and external political or economic pressures, raising questions about their objectivity and reliability. This article examines the mechanisms enabling such manipulation, including biased weighting, qualitative assessments, and geopolitical influences, using case studies from Georgia’s CPI improvements, the World Bank’s Doing Business scandal involving China and others, and Turkey’s Democracy Index rankings. A regression analysis of the Happiness Index reveals that higher crime rates and antidepressant consumption paradoxically correlate with elevated happiness scores, suggesting methodological inconsistencies. Focusing on Armenia, the study presents original survey research involving 250 respondents (urban and rural, balanced by age and gender) to compare public safety perceptions with Armenia’s high Safety Index ranking (8th globally, score 77.9, Numbeo 2024). The survey reveals significant discrepancies with the country’s high Safety Index ranking, such as 50% reporting frequent theft and 30% of women feeling unsafe, highlighting methodological flaws in crowd-sourced indices. These findings underscore economic and political implications for small economies like Armenia, where idiocies drive tourism but misalign with realities. Recommendations include enhancing transparency and reforming safety policies. By integrating case studies, survey data, and regression analysis, this study contributes to discourse on index reliability and informs policy for small states.

    References

    • • Broome, Andre. 2022. “Doing Business: How Countries Gamed the World Bank’s Business Rankings.” https://eprints.lse.ac.uk/114220/1/politicsandpolicy_world_bank_business.pdf

    • Cagaptay, Soner. 2017. “The New Sultan and the Crisis of Modern Turkey.” Washington Institute for Near East Policy. https://www.washingtoninstitute.org/policy-analysis/new-sultan-and-crisis-modern-turkey.

    • Economist Intelligence Unit. 2024. Democracy Index 2024. London: Economist Intelligence Unit. https://www.eiu.com/n/campaigns/democracy-index-2024/

    • Helliwell, J. F., Layard, R., Sachs, J. D., De Neve, J.-E., Aknin, L. B., & Wang, S. (Eds.). (2024). World Happiness Report 2024. University of Oxford: Wellbeing Research Centre. https://www.worldhappiness.report/ed/2024/

    • Hernandez, Nicolas Palacios. “Is the Economist Intelligence Unit’s Democracy Index Little More Than a Joke Indicator?” Journal of Political Analysis, 2023. https://theloop.ecpr.eu/is-the-economist-intelligence-units-democracy-index-little-more-than-a-joke-indicator/

    • Human Rights Watch, World Report, 2016, 2023. https://www.hrw.org/world-report/2016/country-chapters/turkey , https://www.hrw.org/world-report/2023/country-chapters/turkey

    • Institute for Economics & Peace. Global Peace Index 2024: Measuring Peace in a Complex World, Sydney, June 2024. https://www.economicsandpeace.org/wp-content/uploads/2024/06/GPI-2024-web.pdf

    • Numbeo “Safety Index 2024.” https://www.numbeo.com/crime/rankings_by_country.jsp?title=2024&displayColumn=1

    • Sandefur J. “The Data Manipulation Scandal That Could Topple the Heads of the World Bank and IMF”. https://www.cgdev.org/blog/data-manipulation-scandal-could-topple-heads-world-bank-and-imf-explained

    • Transparency International. 2024. Corruption Perceptions Index 2024. Berlin: Transparency International. https://www.transparency.org/en/publications/corruption-perceptions-index-2024

    • Transparency International. The ABC of CPI: How the Corruption Perceptions Index is Calculated. 2025 Transparency International. https://www.transparency.org/en/news/how-cpi-scores-are-calculated

    • Transparency International. Corruption and Anti-Corruption Policy in Georgia: 2016-2020. https://transparency.ge/en/post/corruption-and-anti-corruption-policy-georgia-2016-2020

    • Transparency International. Russian Businesses of Bidzina Ivanishvili and His Relatives. 2022. https://transparency.ge/en/post/russian-businesses-bidzina-ivanishvili-and-his-relatives

    • United Nations Development Programme. Human Development Report 2023-24. New York: UNDP. https://hdr.undp.org/content/human-development-report-2023-24

    • United Nations Development Programme. Human Development Report 2021-22. New York: UNDP. https://hdr.undp.org/content/human-development-report-2021-22

    • WilmerHale. Investigation of Data Irregularities in Doing Business Reports. Washington, DC: WilmerHale, 2021. https://www.worldbank.org/en/news/statement/2021/09/16/world-bank-group-to-discontinue-doing-business-report ; https://thedocs.worldbank.org/en/doc/84a922cc9273b7b120d49ad3b9e9d3f9-0090012021/original/DB-Investigation-Findings-and-Report-to-the-Board-of-Executive-Directors-September-15-2021.pdf

    • World Bank. 2020. Doing Business 2020. Washington, DC: World Bank. DOI:10.1596/978-1-4648-1440-2. https://archive.doingbusiness.org/en/reports/global-reports/doing-business-reports

    • World Bank. 2023. “GDP per Capita.” https://data.worldbank.org/indicator/NY.GDP.PCAP.CD

    • World Economic Forum. 2019. Global Competitiveness Report 2019. Geneva: World Economic Forum. https://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf

  • International economics

    The Reconfiguration of Intra-Regional Trade in the EAEU Under Sanctions Against Russia

    Galina Khmeleva, Marina Kurnikova, Ekaterina Chirkunova
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    Abstract

    The 2022 sanctions on Russia created a natural experiment testing the resilience of the Eurasian Economic Union. This paper investigates the transformative impact of these sanctions on the structure, volume, and logistics of intra-regional trade within the EAEU. It aims to identify the key adaptation mechanisms that ensured the bloc’s resilience and to analyze the reconfiguration of its internal economic landscape. Using 2021–2024 trade and logistics data, we document a stark divergence: while Russia’s and Belarus’s 2024 exports contracted to 80.2% and 20.0% of their 2021 levels, respectively, Armenia’s exports surged to 439.4%, with Kyrgyzstan and Kazakhstan also more than doubling. A granular analysis reveals profound structural shifts beneath these aggregates: EAEU imports consolidated around critical machinery and consumer goods, while exports underwent a pronounced shift towards a commodity-based economy, with the share of mineral fuels soaring from 44% to 62% of the total. This reorientation was enabled by a logistical pivot to road transport, which saw a 28% increase in freight turnover, and the emergence of vital hubs like Armenia. We argue that the EAEU’s pre-existing institutional architecture was critical for this adaptation, transforming into a vital buffer. While the sanctions were a primary catalyst, other global economic factors concurrently shaped these outcomes. The study offers global lessons on the diminishing returns of sanctions against integrated blocs and the newfound strategic agency of small economies in a fragmenting world.

    References

    Ati.su: Freight exchange and the largest ecosystem of services for transport logistics in Russia and the CIS. URL: https://ati.su/ (accessed October, 1, 2025).

    Bali, M., Rapelanoro, N., Pratson, L.F. (2024). Sanctions Effects on Russia: A Possible Sanction Transmission Mechanism? European journal on criminal policy and research, 30(2), pp. 229-259. DOI: 10.1007/s10610-024-09578-w

    Belozyorov, S. A., Sokolovska O. (2020). Economic Sanctions against Russia: Assessing the Policies to Overcome their Impact. Economy of Regions, 16(4), pp. 1115-1131. DOI 10.17059/ekon.reg.2020-4-8

    Di Pietro, F., Lecca, P., Salotti, S. (2020). Regional economic resilience in the European Union: a numerical general equilibrium analysis. Spatial Economic Analysis, 16, pp. 287-312. DOI: 10.1080/17421772.2020.1846768

    Eurasian Economic Commission. Statistics. URL: https://eec.eaeunion.org/en/news/statistics/ (accessed September, 15, 2025).

    Felbermayr, G., Morgan, C., Syropoulos, C., Yotov, Y. (2025). Economic Sanctions: Stylized Facts and Quantitative Evidence. Annual Review of Economics, 17, pp. 175-195. DOI: 10.1146/annurev-economics-081623-020909

    Giannakis, E., Bruggeman, A. (2017). Determinants of regional resilience to economic crisis: a European perspective. European Planning Studies, 25, pp. 1394-1415. DOI: 10.1080/09654313.2017.1319464

    Izvestiya: Mishustin pointed out a 6.8% growth in mutual trade among EAEU countries in 2024 (15.08.2025). URL: https://iz.ru/1937241/2025-08-15/mishustin-ukazal-na-rost-obema-vzaimnoi-torgovli-stran-eaes-za-2024-god-na-68 (accessed October, 1, 2025).

    Loginova, I.V., Titarenko, B.A., Sayapin, S.N. (2015). Economic Sanctions Against Russia. Current Issues in Economic Sciences, 47, pp. 38-44.

    Morgan, T.C., Syropoulos, C., Yotov, Y.V. (2023) Economic sanctions: Evolution, consequences, and challenges. Journal of Economic Perspectives, 37(1), pp. 3-29. DOI: 10.1257/jep.37.1.3

    Sedrakyan, G.S. (2022). Ukraine war-induced sanctions against Russia: Consequences on transition economies. Journal of Policy Modeling, 44(5), pp. 863-885. DOI: 10.1016/j.jpolmod.2022.08.003

    Sensier, M., Bristow, G., Healy, A. (2016). Measuring Regional Economic Resilience across Europe: Operationalizing a complex concept. Spatial Economic Analysis, 11, pp. 128-151. DOI: 10.1080/17421772.2016.1129435

    Tarr, D.G. (2016). The Eurasian Economic Union of Russia, Belarus, Kazakhstan, Armenia, and the Kyrgyz Republic: Can It Succeed Where Its Predecessor Failed? Eastern European Economics, 54(1), pp. 1-22. DOI: 10.1080/00128775.2015.1105672

    Trademap (2025). Trade statistics for international business development. URL: https://www.trademap.org/Index.aspx (accessed October, 1, 2025).

    Vinokurov, E. (2017). Eurasian Economic Union: Current state and preliminary results. Russian Journal of Economics, 3, pp. 54-70. DOI: 10.1016/j.ruje.2017.02.004

Management

  • Management

    Analysis of the Organization's Activity on the Example of the Mckinsey Matrix. Theoretical-Experimental Approach

    Hovhannes Yeritsyan
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    Abstract

    Due to resource constraints, a company cannot cater to all potential markets worldwide in a manner that satisfies all clients and achieves business goals. Therefore, it becomes important for the company to carefully select the most appropriate markets. Given the plethora and diversity of available markets, analyzing market attractiveness and selecting the most promising ones becomes a complex process. The General Electric Matrix, also known as the McKinsey Matrix, employs two dimensions-market attractiveness and competitive strength of the firm-to analyze a company's strengths and weaknesses across various areas. The matrix aims to help the company identify the most appealing markets, guiding managers in resource allocation and enabling them to enhance the firm's weaker competitive positions in emerging markets or withdraw from less attractive markets. This tool proves highly effective for international market specialists, aiding in the selection of foreign markets for the company and determining the internationalization strategy to be employed in those markets. This paper concludes with a segment of a broader study showcasing how the General Electric Matrix/McKinsey is specifically utilized in the process of selecting markets. The author used a matrix as an example of a case study, as a result of which the position of a separate portfolio in the market was analyzed and the necessary strategy was proposed for each portfolio.

    References

    1. Boyd W. Harper, Walker C. Orville, Larreche Jean-Claude, Marketing Management. A Strategic Approach with a global orientation, Irwin. 1995, pp. 3-5.

    2. Fleisher S. Craig, Bensonssan E. Babette, Strategic and Competitive Analysis. Methods and Techniques for Analyzing Business Competition, Pearson Education, New Jersey. 2003, pp. 97-101.

    3. Grant R. M., Contemporary strategy Analysis: Concepts, Techniques and Application. 3rd Edition, Blackwell Publishers. 2000, pp. 36-37.

    4. Hollensen S., Global Marketing: a decision oriented approach, Prentice Hall, Englewood Cliffs. 2004, p. 38.

    5. Business tools, McKinsey matrix http://www.business-tools-templates.com/General_Electric_GE_mckinsey_matrix.htm , 07.01.2024

  • Management

    Energy Security and Economic Resilience of RA in the Context of Current Geopolitical Developments

    Liana Karapetyan
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    Abstract

    This article analyzes the current manifestations of Armenia’s energy security and economic resilience in the context of recent geopolitical changes. It assesses the current state of Armenia’s energy security and economic resilience based on key indicators used in international policy and well-supported in the academic literature. The analysis shows that the adopted indicators - such as energy intensity, external energy dependence, and measures of supplier concentration - have methodological limitations and do not fully reflect the country’s structural and geopolitical specificities. The main goal of this study is to examine the limitations and gaps of commonly used energy security indicators in the context of Armenia’s green transition policies and current geopolitical developments. By analyzing various indicators of energy security and economic resilience and contextualizing them for the Armenian economy, a multi-component qualitative assessment has been investigated, showing that these indicators alone do not provide a comprehensive picture and do not fully reflect the country’s structural and geopolitical characteristics. Energy policy can be more effective and targeted when informed by clear and integrated assessments of these factors. Such an approach is essential to support Armenia’s long-term energy security and economic resilience.

    References

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    ArmStat. (n.d.). SDG 7.3.1 – Share of population with access to electricity and clean cooking fuel. Retrieved November 19, 2025, from https://sdg.armstat.am/7-3-1/.

    ArmStat. Energy Balance of the Republic of Armenia, 2015–2023. Yerevan: ArmStat, 2023. https://armstat.am/file/doc/99544448.pdf.

    ArmStat. Non observed economy in the national accounts of Armenia: Implementation of 2008 SNA and measuring of NoE. Yerevan: Statistical Committee of RA / UN ECE, 2021.

    Aweke, T., & Navrud, S. Valuing energy poverty costs: Household welfare loss from electricity blackouts in developing countries. Energy Economics, 109, 2022. https://doi.org/10.1016/j.eneco.2022.105943.

    Ayana, O.U., Degaga, J. Effects of rural electrification on household welfare: a meta-regression analysis. International Review of Economics, 69(2):209–261, 2022. https://doi.org/10.1007/s12232-022-00391-7.

    Bajo-Buenestado, F. The effect of blackouts on household electrification status: Evidence from Kenya. Energy Economics, 94, 2021. https://doi.org/10.1016/j.eneco.2020.105067.

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    Böhringer, C., & Bortolamedi, M. Sense and no(n)-sense of energy security indicators. Ecological Economics, 119:359–371, 2015. https://doi.org/10.1016/j.ecolecon.2015.09.020.

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    CASE – Center for Social and Economic Research. Increasing the Economic Resilience of Armenia. Warsaw: CASE, 2024, 59.

    Chen, H., Yan, K., Gong, H., Geng, H., & Yuan, X.-C. Assessing the business interruption costs from power outages in China. Energy Economics, 105, 2022. https://doi.org/10.1016/j.eneco.2021.105757.

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  • Management

    Approaches to the development of a water resource safety system in the Republic of Armenia

    Aram Karapetyan, Tigran Karapetyan
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    Abstract

    The objective of this study is to implement functions—specifically investment measures and legal mechanisms - targeted at reducing Non-Revenue Water (NRW) in the Republic of Armenia (RoA), to address the challenges and issues of enhancing the efficiency of water-resource supply and consumption, including both drinking and irrigation water. The object of the research is the water resources system of RoA and its components. The subject of the research is the principles of water resources supply/management, economic-mathematical methods and models, which are aimed at assessing the increase of the efficiency of water resources supply and consumption with the help of system-wide improvement.

    References

    1. United Nations Economic Commission for Europe (UNECE). (2022). Environmental Performance Reviews: Armenia, Third Review. Geneva.

    2. Ministry of Environment RA. (2023). Annual Report on Water Resources and Use in Armenia.

    3. FAO. (2020). Integrated Water Resources Management in Armenia: Challenges and Solutions. Food and Agriculture Organization.FAO. (2020). Integrated Water Resources Management in Armenia: Challenges and Solutions. Food and Agriculture Organization.

    4. UNDP. (2021). Water Security in the South Caucasus: Regional Assessment Report. United Nations Development Programme.

    5. Sargsyan, A. (2021). Integrated water resources management in Armenia. Water Policy Journal, 23(4), 451–466.

    6. UNECE. (2022). Environmental Performance Reviews: Armenia. United Nations Economic Commission for Europe.

    7. Rudolf Frauendorfer, Roland Liemberger. The Issue and Challenges of Reducing Non-Revenue Water- Asian Development Bank, 2010.- 51 p.

    8. Bill Kingdom, Roland Liemberger, Philippe Marin. The Challenge of Reducing Non-Revenue Water (NRW) in Developing Countries How the Private Sector Can Help: A Look at Performance-Based Service Contracting - The World Bank, Washington, DC, 2006 - 52 p.

    9. Using Performance-Based Contracts to Reduce Non-Revenue Water. -The World Bank, 2016 - 28 p.

Finance

  • Finance

    Assessment of the Efficiency of Investment Activity of Insurance Companies in the Republic of Armenia.

    Norayr Safaryan, Lusine Ghazaryan
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    Abstract

    The article analyzes the structure and efficiency of investment activities of non-life insurance companies operating in the insurance market of the Republic of Armenia, based on which it is recorded that investment policy plays a key role in ensuring the financial stability, liquidity and profitability of companies. From the investment indicators of the six insurance companies studied for 2020–2024, including the investment activity ratio, profit sensitivity ratio, ROE and ROA, it becomes obvious that the efficiency of investments varies significantly between different companies and periods, due to management approaches and the market situation. The recorded trends and asymmetries indicate the need to revise asset management strategies. This study is important from the point of view of the development of the insurance sector, since the investment policy of insurance companies significantly affects their financial stability and competitiveness.

    Assessment of the Efficiency of Investment Activity of Insurance Companies in the Republic of Armenia

    References

    1. Arena, M. (2008). Does insurance market activity promote economic growth? A cross-country study for industrialized and developing countries. Journal of Risk and Insurance, 75(4), 921–946.

    2. Babbel, D. (2001). Asset/liability management for insurers in the new era: Focus on value. Journal of Risk Finance, 3, 9–17.

    3. Chen, X., Yao, T., & Yu, T. (2007). Prudent man or agency problem? On the performance of insurance mutual funds. Journal of Financial Intermediation, 16, 175–203.

    4. Eling, M., & Schmeiser, H. (2010). Insurance and the credit crisis: Impact and ten consequences for risk management and supervision. The Geneva Papers on Risk and Insurance - Issues and Practice, 35, 9–34.

    5. Heyman, W. H., & Rowland, D. D. (2006). An investment management methodology for publicly held property/casualty insurers. Journal of Applied Corporate Finance, 18(1), 36–53.

    6. Kozmenko, O., & Roienko, V. (2013). Evaluation and use of indicators of insurance companies’ investment activities. Investment Management and Financial Innovations, 10(3), 98–105.

    7. Kraus, A., & Litzenberger, R. H. (1973). A state‐preference model of optimal financial leverage. Journal of Finance, 28(4), 911–922.

    8. Liebenberg, A. P., Carson, J. M., & Hoyt, R. E. (2010). The demand for life insurance policy loans. Journal of Risk and Insurance, 77(3), 651–666.

    9. Pottier, S. W. (2007). The determinants of private debt holdings: Evidence from the life insurance industry. Journal of Risk and Insurance, 74(3), 591–612.

    10. Thomas, S. (2005). Asset/liability management and enterprise risk management of an insurer [Electronic resource]. Journal of Investment Management, 3(1). Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=680844

    11. Zéghal, D., & Maaloul, A. (2010). Analysing value added as an indicator of intellectual capital and its consequences on company performance. Journal of Intellectual Capital, 11(1), 39–60.

    12. Ingo Armenia. (n.d.). Retrieved July 2025, from https://ingoarmenia.am

    13. Liga. (n.d.). Retrieved July 2025, from https://www.liga.am

    14. Rego Insurance. (n.d.). Retrieved July 2025, from https://regoinsurance.am

    15. Armenia Insurance. (n.d.). Retrieved July 2025, from https://armeniainsurance.am

    16. NAIRI. (n.d.). Retrieved July 2025, from https://imnairi.am

    17. SIL Insurance. (n.d.). Retrieved July 2025, from https://silinsurance.am

Economic and mathematical modeling

  • Economic and mathematical modeling

    Remittances in Post-Soviet countries: Econometric research for Armenia

    Alvard Kharatyan, Ani Galstyan
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    Abstract

    This study investigates the role of personal remittances in post-Soviet economies, with a particular focus on Armenia’s economic development. In several post-Soviet countries, where remittances exceed 30% of GDP, they have become a crucial factor influencing economic stability, social welfare, and political security. The statistical analysis indicates significant heterogeneity across these economies: in Central Asian countries, remittances are an essential source of household income; in Russia, Kazakhstan, and the Baltic states, their role is relatively minor; while in the South Caucasus and Moldova, they represent a key driver of economic activity and investment. For Armenia, the study estimates the impact of personal remittances, gross investment, and private consumption on economic growth using quarterly data for the period 1996–2024. Two multiple regression models were specified and estimated: the first using the Ordinary Least Squares (OLS) method, and the second addressing potential endogeneity issues through the Two-Stage Least Squares (TSLS) approach. The empirical findings suggest that personal remittances have no statistically significant short-run effect on economic growth in Armenia. In contrast, private consumption and gross investment make a positive and statistically significant contribution to economic growth. The results of this analysis may provide valuable insights for post-Soviet policymakers seeking to reduce reliance on external remittances and redirect these inflows toward productive investment.

    References

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    Armenia International Outmigration: An Exploration on the Effects on Armenian Households’ Welfare Poverty and Equity GP – The World Bank․ October 2019, p. 12. https://documents1.worldbank.org/curated/en/999871570627713212/pdf/Armenia- International-Outmigration-an-exploration-on-the-effects-on-Armenian-households- welfare.pdf ․ seen 09.09. 2025

    Barajas A.; Chami R.; Fullenkamp C.; Gapen M; Montiel, P. (2009). Do Workers' Remittances Promote Economic Growth? IMF Working Papers 153, International Monetary Fund, p. 17․ July 2009. DOI:10.5089/9781451873009.001

    Bhaskara R.B., Mainul H.G. (2011). A panel data analysis of the growth effects of remittances, Economic Modelling, Elsevier, vol. 28(1-2), pp. 701-709, January. DOI:10.1111/j.1467-9701.2011.01399.x

    Calero C., Bedi Arjun S., Sparrow R. (2009). Remittances, Liquidity Constraints and Human Capital Investments in Ecuador, World Development, Volume 37, Issue 6, Pages 1143-1154. ISSN 0305-750X, https://doi.org/10.1016/j.worlddev.2008.10.006.

    Chami, R., Fullenkamp C. and Samir J. (2003). Are Immigrant Remittance Flows a Source of Capital for Development. International Monetary Fund Working Papers 03/189, IMF, Washington DC. p.21. https://doi.org/10.5089/9781451859638.001

    Comes C.-A., Bunduchi E., Vasile V., Stefan D. (2018). The Impact of Foreign Direct Investments and Remittances on Economic Growth: A Case Study in Central and Eastern Europe. MDPI. Sustainability, 2018, 10, 238. pp. 1-16. https://doi.org/10.3390/su10010238

    Dhungel K. R. (2023). The Link between Remittance and Economic Growth: An ARDL Bound Testing Approach. Nepal Rastra Bank, Economic Review, 2023, Vol 30-2, pp. 1-18.

    Feeny S., Iamsiraroj S., McGillivray M. (2014). "Remittances and Economic Growth: Larger Impacts in Smaller Countries?," Journal of Development Studies, Taylor & Francis Journals, vol. 50(8), pp. 1055-1066, August. DOI: 10.1080/00220388.2014.895815

    Frankel J. (2011). "Are Bilateral Remittances Countercyclical?," Open Economies Review, Springer, vol. 22(1), pages 1-16, February. DOI: 10.1007/s11079-010-9184-y

    Grigorian D.A., Kryshko M. (2017). Deposit Insurance, Remittances, and Dollarization: Survey- Based Evidence from a Top Remittance-Receiving Country. IMF Working Paper, WP No.132․ ISBN: 9781484300718. ISSN: 1018-5941

    Grigorian D.A. , Melkonyan T.A. (2011). Destined to Receive: The Impact of Remittances on Household Decisions in Armenia. Review of Development Economics, 15(1). DOI:10.1111/j.1467-9361.2010.00598.x

    Jansen D.W. and Vacaflores, D.E. (2020), Remittances, Output, and Exchange Rate Regimes: Theory with an Application to Latin America. Southern Economic Journal, 86: pp. 1170- 1191. https://doi.org/10.1002/soej.12399

    Ifeakachukwu N.P., Oladiran A.T. (2016). Capital Inflows and Economic Growth in Nigeria: The Role of Macroeconomic Policies, African Development Review, African Development Bank, vol. 28(3), pp. 277-290, September.

    https://doi.org/10.1111/1467-8268.12205

    Kharatyan A., Buniatyan A. (2024). Assessment of the long-term relationship between RA personal transfers-economic growth using the VEC model. Journal of Yerevan University. Economy, Vol. 15, No. 2(44), December, 102-111.

    Kumar R. R., Stauvermann P. J., Patel A., Prasad S. (2018). The Effect of Remittances on Economic Growth in Kyrgyzstan and Macedonia: Accounting for Financial Development. International Migration Vol. 56 (1) 2018, pp. 95-126. https://doi.org/10.1111/imig.12372

    Lartey E. (2016). Exchange Rate Flexibility and the Effect of Remittances on Economic Growth Policy. World Bank Group, Research Working Paper 7932, 2016-12.

    Maty, K. (2018). "Do remittances not promote growth? A finite mixture-of-regressions approach," Empirical Economics, Springer, vol. 54(2), pp. 747-782, March.

    DOI: 10.1007/s00181-016-1224-z

    Migration Profile of the Republic of Armenia, 2023, Yerevan, 2025, pp. 24–27. https://armstat.am/file/article/migration_profile_2023_am_.pdf

    Olayungbo D., Quadri A. (2019). Remittances, financial development and economic growth in Sub-Saharan African countries: evidence from a PMG-ARDL approach. Financial Innovation 5, Article number: 9. Open Access. 19 February, 2019.

    DOI:10.1186/s40854- 019-0122-8

    Poghosyan T. (2020). Remittances in Russia and Caucasus and Central Asia: The Gravity Model. IMF Working Paper, WP No. 2020/128, p.4, ISBN: 9781513550206, ISSN: 1018-5941

    Ratha D․ (2019). Remittances: Funds for the Folks Back Home. February 5. Finance & Development Magazine. https://www.imf.org/en/Publications/fandd/issues/Series/Back-to- Basics/Remittances, seen 24.04.2025

    Raimi L., Ogunjirin O.D. (2012). Fast‐tracking sustainable economic growth and development in Nigeria through international migration and remittances, Humanomics, Vol. 28 No. 3, pp. 209-219. https://doi.org/10.1108/08288661211258101

    Rubel I. MD., Kang-Kook L. (2023). Do Foreign Remittances Promote Democracy? A Dynamic Panel Study of Developing Countries, Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 64(1), pages 59-85, June. DOI: 10.15057/hje.2023004

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    Salahuddin M., Gow J. (2015) The relationship between economic growth and remittances in the presence of cross-sectional dependence. The Journal of Developing Areas, Vol. 49, No. 1, Winter 2015, pp. 207-221.

    Senbeta A.S. (2013). Remittances and the sources of growth, Applied Economics Letters, Taylor & Francis Journals, vol. 20(6), pp. 572-580, April.

    DOI: 10.1080/13504851.2012.718057

    Shera A., Meyer D. (2013). Remittances and their impact on Economic Growth. Social and Management Sciences 21/1 3–19. pp. 3-19.

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    https://doi.org/10.1111/j.1468-2435.2009.00540.x

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  • Economic and mathematical modeling

    Impact of Bonus-Malus System Refinements on Time-To-Accident in Armenia’s Cmtpl Insurance: A Survival Analysis Approachal Analysis Approach

    Anahit Gulyan, Yelena Gevorgyan
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    Abstract

    This article investigates the impact of recent reforms in Armenia’s Bonus-Malus (BM) system on the time-to-accident among Compulsory Motor Third-Party Liability (CMTPL) policyholders. Specifically, it evaluates whether the 2022 introduction of claim severity adjustments influenced policyholder behavior across different risk groups. Utilizing survival analysis methods on a dataset comprising over 2.3 million insurance contracts, the research identifies statistically significant improvements in accident-free durations post-reform. Results reveal that policyholders in certain vehicle categories and risk classes exhibited behavioral shifts, while others, such as public transport drivers and individuals in extreme BM classes, did not. Policyholder’s gender emerged as a statistically significant risk factor, with female drivers showing consistently lower accident-free times. The findings underscore the effectiveness of claim severity-based malus policies and suggest that further personalization for example through telematics, can enhance fairness and incentivize safer driving

    References

    AMIB. (2025). Retrieved from https://appa.am/

    ASWA. (2025). Retrieved from https://aswa.am/

    Chitchyan, R., & Gulyan, A. (2015). A BONUS-MALUS SYSTEM WITH AGGREGATE CLAIM AMOUNT COMPONENT. Journal of Contemporary Mathematical Analysis (Armenian Academy of Sciencies), 74-88.

    Meyers, G., & Hoyweghen, I. V. (2017). Enacting Actuarial Fairness in Insurance: From Fair Discrimination to Behaviour-based Fairness. Science as Culture, 1-27.

    Nag, A. (2022). Survival Analysis with Python. Taylor & Francis Group, LLC.

    OECD. (2021). Retrieved from https://www.oecd.org/finance/Gender-Insurance-2021.pdf

    StatsDirect. (2025). Retrieved from https://www.statsdirect.com/help/survival_analysis/logrank.htm

  • Economic and mathematical modeling

    Tracing Tariff Impacts Through Electricity Supply Chains: Assessment of the Effects of Trade Policy on Retail Electricity Prices

    Hayk Mardanyan, Ani Khalatyan
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    Abstract

    This study examines the relationship between tariffs on electricity supply chain products and retail electricity prices in the United States, with a focus on Minnesota. Using a two-stage regression framework, we first estimate how a 1% increase in tariffs on 440 key electricity supply chain product categories—ranging from fuels and raw materials to advanced generation and grid technologies—affects imports of these products. We find that such a tariff increase is associated with a 4.55% reduction in imports. In the second stage, we link tariff-induced changes in imports to retail electricity prices across residential, commercial, and industrial sectors. Statistically significant and robust results are found only for the residential sector, where a 1% tariff increase corresponds to a 0.78 cent/kWh rise in retail prices. Applying these results to recent U.S. trade agreements with major partners—including the European Union, Japan, South Korea, and the United Kingdom—we project that Minnesota’s electricity sector will incur an additional $2.29 billion annually or an average increase of $0.035/kWh, translating into an increase of $316 per year in electricity bills for an average residential ratepayer if these tariffs are maintained for a substantial period of time. The findings highlight strong historical co-movement between upstream input costs and residential electricity prices, underscoring the need for targeted policy responses to mitigate potential impacts on households, especially low-income consumers.

    References

    Bergstrand, J. H. (1985). The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence. The Review of Economics and Statistics, 474–481. https://doi.org/10.2307/1925976

    Cerullo, M., & Walsh, J. (2025, 08 01). Trump unveils higher tariffs on dozens of countries. Retrieved from CBS News: https://www.cbsnews.com/news/trump-trade-deals-tariffis-deadline/

    Cheong, J., Kwak, D. W., & Tang, K. K. (2018). The trade effects of tariffs and non-tariff changes of preferential trade agreements. Economic Modelling, 370-382. https://doi.org/10.1016/j.econmod.2017.08.011

    Feenstra, R. C., & Taylor, A. M. (2021). International Economics. Worth Publishers.

    Shapiro, J. S. (2021). The Environmental Bias of Trade Policy. The Quarterly Journal of Economics, 831–886.

    U.S. Energy Information Administration. (2023). 2023 average monthly bill-residential. Retrieved from U.S. Energy Information Administration: https://www.eia.gov/electricity/sales_revenue_price/pdf/table_5A.pdf

    U.S. Energy Information Administration. (2023). Table C17. Electricity sales to ultimate customers, total and residential, total and per capita, ranked by state, 2023. Retrieved from U.S. States: State Profiles and Energy Estimates: https://www.eia.gov/state/seds/data.php?incfile=%2Fstate%2Fseds%2Fsep_sum%2Fhtml%2Frank_es_capita.html

    U.S. Energy Information Administration. (2025, 08 04). Electricity Explained: Use of Electricity. Retrieved from U.S. Energy Information Administration: https://www.eia.gov/energyexplained/electricity/use-of-electricity.php

    U.S. Energy Information Administration. (2025, 08 07). Minnesota: State Profile and Energy Estimates. Retrieved from U.S. Energy Information Administration: https://www.eia.gov/state/data.php?sid=MN

    U.S. Energy Information Administration. (2025, 08 07). State Electricity Profiles. Retrieved from U.S. Energy Information Administration: https://www.eia.gov/electricity/state/minnesota/

    Zuo, Q., & Majeed, M. T. (2024). Does trade policy uncertainty hurt renewable energy-related sustainable development goals in China? Heliyon.

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