Thread by @algalitsky

In 1951, Israel began issuing govt bonds marketed towards the diaspora to fund development initiatives.

Within 6 years, bonds were funding 35% of Israel's national development projects.

Today, Israel's annual bond sales exceed $1 billion.

Armenia should learn from this model.

Armenia has never had a sustainable long-term approach to diaspora investment.

That's not to say Armenians aren't sending money to Armenia.

In 2013, remittances (personal transfers) from the diaspora to Armenia amounted to 20% of the country's GDP.

But today, it's barely 11%.

The decrease in remittances as a % of GDP to Armenia does not correlate with GDP growth - meaning remittances have decreased in absolute terms.

The United States and Russia (~50% of Russian remittances come from labor migrants) are the two largest points of origin.

Typically, remittance inflow from Russia accounts from anywhere between 50-75% of the total.

US inflow accounts for between 10-15%.

The remainder is split between South America, Canada and Europe.

These have all been stagnant, or in decline - particularly those from Russia.

According to some surveys, for households that receive remittances, remittances account for up to 80% of household income.

As such, remittances play an important role in mitigating the impacts of poverty in the country.

But they aren't an alternative to long-term investment.

Remittances are, by nature, personal. They aren't evenly distributed across the population, they aren't oriented towards investment, and aren't a sustainable long-term strategy for poverty alleviation & national development - particularly considering the downward trajectory.

As such, any system of diaspora financial engagement needs to promote consistent long-term investment in Armenia that can be utilized by the government in a transparent manner to fund development initiatives.

And a diaspora bond program is a great starting point.

In an article for the Armenian Weekly from 2018, I discussed the prospect of a diaspora bond program in Armenia.

I suggested it would be a good model for development, but that it wasn't without its risks.

armenianweekly.com/2019/01/02/pas…

One risk is the composition of the diaspora. Russian Armenians who give the bulk of remittances aren't necessarily in a position to invest - they are low-income workers, and they send more in remittances as a percentage of income than their US & European counterparts.

But the overall downward trajectory in remittance inflow from the more established, wealthy diaspora may also be indicative of a lack of interest.

Additionally, FDI (foreign direct investment) in Armenia has also been in decline - another concerning sign.

Additionally, most FDI to Armenia is diaspora-led - with many (for example, Ruben Vardanyan, Eduardo Eurnekian, etc.) engaged in private investment projects that have proven successful. As such, there's no guarantee high net worth investors will become govt bond-holders.

Israel's bond program was launched close to the founding of the state - meaning it was a blank slate and there was a strong impetus for diaspora investment as a form of nation-building.

Those same conditions haven't truly existed in Armenia - until now.

Armenians across the world have mobilized in an unprecedent way over the last 50 days.

Now, we need to channel that into a sustainable development plan.