Armenia...and Georgia

Travelling to Armenia has made me realize one should travel a lot to understand poverty. While I had lived and seen many countries in Africa, Latin America and Asia, I had never been to an ex-Soviet Union country. I have to admit I was surprised by its poverty and how different it was from the kind of poverty I had seen before. According to my new experience, things that poor countries have in common include: a lot of abandoned and falling apart buildings, dogs all over the place, scary military people everywhere, complicated border crossings, littering in the street as if they didn't care about their city and crazy driving as cars don't stop for pedestrians, they accelerate and beep them. Also some little things like the fact that in my father's flat elevator, to get to the 5th floor we have to press on 2. These seem so simple problems and not “that bad” but they are ubiquitous.

Still, it doesn't look like a chaotic place at all but there seems to be very little economic activity. Huge abandoned factory buildings and industrials infrastructures are everywhere and many houses reminded me of African shanty towns. Still, most people seemed quite well-off.


A trip to Georgia left me puzzled once again about my conception of poverty. Tbilisi is a amazing place with a magical architecture and where guys yell at girls and slap them in front of everybody. However, the country side is grey and its people didn't look any better off than in Madagascar, I thought. So I checked my favorite and best indicator in the world, GDP per capita, measured with purchasing power parity exchange rates.


Armenia fares a bit better, at 5700$, which is like half that of Botswana , Mexico or Russia, while Georgia is at 3900$. This is a bit poorer than Cuba, still 4 times more than Madagascar. While some may argue that this doesn't take into account income inequalities, it gives a good approximation of the way of life of most of its inhabitants. If it's this low in these 2 South Caucasus countries, probably most people are struggling, except for the omnipresent “oligarchs”.


Finally, as my border crossing episode makes clear, corruption explains most of this poverty. It also makes me realize once again how we are well in the West as we feel the law is on our side. Being trying to understand development for the past few years, I'm mystified by what happened in the West. How could democracy emerge? How could people stop fearing governments and take control. Corrupt and poor countries appear so trapped...and living with corruption is super annoying.


Anyway this is all vague but as I read John McMillan's book on markets I understood that while markets were the best thing for growth and emancipation there is a fundamental top-down requirement: the rule of law. Good democratic institutions allow mutual trust and social capital investment which allows markets to thrive. It's no doubt that much growth empirics is about that nowadays. This is inexistent in all poor countries.
All in all I recommend all of you to visit these two amazing countries. Just for Armenian pizza it is worth it.

Pictures from my trip can be seen here and here.