ECONOMIC GROWTH AND SOCIAL ISSUES IN ARMENIA։ ASSESSING THE INTERACTION BETWEEN ECONOMIC GROWTH, INEQUALITY, AND POVERTY

Abstract

             The article analyzes the existing social issues in Armenia and examines the role of economic growth in addressing these issues. Hypotheses have been proposed, and econometric models have been constructed to test them. According to the results of the Bounds test, there are no long-term relationships between the variables of Economic Growth, Poverty rate, and Gini income coefficient. Using regression and ARDL models, the short-term interactions of these variables have been assessed. The results indicate that economic growth in Armenia contributes to poverty reduction but has no significant impact on income inequality. An acceleration of the economic growth rate by one percentage point in the current year leads to a 0.88% reduction in the poverty rate.

           On the other hand, high levels of poverty and inequality hinder Armenia’s economic growth. A 1% increase in the poverty rate in the current year leads to a 0.35 percentage point decline in economic growth, while a 1% increase in the Gini coefficient slows economic growth by 0.45 percentage points after three years.

           The research findings have significant practical implications for developing effective macroeconomic policies aimed at mitigating Armenia’s social issues.