Investment is not being boosted by migration
Despite a healthy and open investment climate and a supportive environment for business start-ups, the level of entrepreneurship in Armenia is low. This is confirmed by the IPPMD survey, which found that only 4% of households own a business. Migration and remittances also do not seem to promote productive investment (other than in education). For instance, the link between receiving remittances and business ownership is negative, indicating that remittance-receiving households are less likely to run a business.
What could explain this pattern? Potential reasons could be the low level of financial inclusion by the population and the rather underdeveloped financial markets, especially in rural areas. Financial institutions - including microcredit organisations, money transfer operators and banks - are much more common in urban areas than in rural areas. For instance, 96% of urban communities have a bank compared to only 2% of rural communities. Furthermore, participation in financial training programmes is very low among migrant and non-migrant households alike: less than 1% of surveyed households benefited from a financial training programme. There is scope to expand the coverage of financial training programmes and household participation in such courses in order to encourage and enable households to make long-term remittance investments.