Small economies facing global challenges: the case of Armenia

Small states are not just miniature versions of “average”-sized economies; they rather exhibit particular features. This paper analyzes – both with cross-country comparisons and in a case study of the Republic of Armenia – with special regard to the external sector, the openness to external trade, the concentration of export commodities and the dependence on strategic imports, as well as the high impact of remittances and official development assistance. 
It concludes that economic vulnerability to external shocks is not a necessary consequence of the small size of an economy – neither in general nor in the case of Armenia. To further meet the challenges of the global economy, small states are well advised to concentrate on industries where economies of scale are irrelevant, especially in the service sector – however, with due consideration of the special geo-political conditions of a country.