MAPPING OF PRODUCTS OF STANDARD GROUPS OF A HARMONIZED SYSTEM AND CHOOSING GROUPS BY ARMENIA FOR IMPORT SUBSTITUTION AND EXPORT PROMOTION

Аннотация

The goal: through a classification of standardized groups of a Harmonized system into four groups to determine the groups with comparative advantages and/or export specialty; as well as those groups that lead to having a trade deficit, in order to find out the groups for export promotion and distinguish the main approach to a strategy of import substitution in Armenia. The methodology: a modified version of the tool of “Mapping of products” suggested by Ullah and Kazuo (2012) and originally developed by Widodo (2008), is used to classify standard product groups of a Harmonized system. In order to classify product groups we have used average values of the index of Normalized detected comparative advantages and the index of a relatively pure export over the period of 2012-2016. The results: Out of 97 product groups, 11 groups of products in total had export specialty and comparative advantages. Ten standard groups of products demonstrated an ability to compete in international markets, however they lack having export specialization. Only one group of products managed to demonstrate a certain degree of export specialty, however, it lacks being able to compete in the world market. The other 75 groups of products did not have either export specialty or competitive advantages. The conclusions: the strategy of the government regarding import substitution and promoting export may become the following in the mid-term perspective: continuing efforts promoting export, as well as measures towards product groups included in group A; developing and implementing the measures that will allow product groups included in group B to lift the degree of export specialty and increase their competitive position in the international markets which will, at the same time, provide for the growth in export and reduction in import, which will lead to strengthening of the trade balance; providing priority attention to those product groups included in group D which may start acquiring export specialty and become more competitive in international markets and/or will contribute to the development and growth of export of products included in groups A and B. The practical application: the conclusions of the manuscript may be used by the Ministry of Economic Development and Investments of the Republic of Armenia and the Development Fund of Armenia when developing strategies of supporting export and import substitution for different industries.