CC BY
18INTERNATIONAL
ECONOMICS
SHOGHIK MEJLUMYAN
PhD student of the Department of Economic and International Economic Relations at Yerevan State University https://orcid.org/0000-0003-2000-0318
MAIN WAYS OF INTERNATIONAL TOURISM DEVELOPMENT IN THE REPUBLIC OF ARMENIA
The primary purpose of the paper is to comprehensively analyze the development of ways and opportunities for the international tourism industry in Armenia. In this context, through analyzing historical series, and using the method of comparative analysis, the author presents the tourism processes in Armenia, combining them with state regulation necessity of the sphere. As a result, the author implies that the effectiveness of international tourism and the country's competitiveness (in this case, Armenia) hugely depend on relevant and proper state policy and acknowledgment of the industry's potential. In the countries with a stable tourism industry, the state's role and participation in the sector's regulation are active. Besides, tourism has severe social consequences, from the impact of the micro-environment on the family to the society in general.
Keywords: tourism, international competitiveness, marketing strategy, state regulation policy, rural tourism, military tourism, cultural tourism JEL: L83, M38
DOI: 10.52174/1829-0280_2022.6-129
Introduction. In the modern world, tourism is a global phenomenon and one of the essential components of international economics. Moreover, international tourism directly or indirectly affects the situation of individual countries, regions, and, in general, the world economy.
The study of the tourism industry's international experience shows that several models, methods, and mechanisms have emerged. But most importantly, it is crucial to find effective ways of international experience localization which will benefit the tourism sector in Armenia. In this regard, it is necessary to map the tourism potential of Armenia, especially emphasizing the main obstacles and challenges to the sector's development. When assessing the potential for tourism development in Armenia, it is necessary to consider that Armenia is a new object in the international tourism market, making it more exciting and attractive. In the Republic of Armenia, tourism still remains an essential sphere for the country's socioeconomic development. Meanwhile, there is no hesitation, that the country's tourism potential hasn't been fully acknowledged, recognized, and developed.
Literature Review. It is important to note that there is no single definition in the economic literature that would enable a comprehensive presentation of international tourism. In general, tourism can be considered as a purposeful movement of people to visit a specific object or satisfy interests with the condition of return. The "Universal Declaration of Human Rights" can be considered as the legal-principal motivation of tourism, which stipulates that:
■ Everyone has the right to freedom of movement and residence within the borders of each State.
■ Everyone has the right to leave any country, including his own, and to return to his country.
■ Everyone has the right to rest and leisure, including reasonable limitation of working hours and periodic holidays with pay1.
One of the first definitions adopted by the United Nations interprets tourism as "active recreation affecting human health and physical development related to movements outside the borders of permanent residence"2. Global Code of Ethics for Tourism, which was adopted in 1999 by the General Assembly of the World Tourism Organization General Assembly of the World Employment Organization (WLO), refers to the following advice-recommendation to the state-social structures that implement policies to develop tourism: "It is necessary to implement tourism policy in such a way that it contributes to meeting the needs of the population of the visited regions and raising the standard of living". Tourism is defined by Eurostat as "visits outside their permanent residence for a period of less than one year and for any purpose, including business, leisure and other personal reasons other than employment at the place of visit"3. Many authors consider tourism as "simultaneously a type of activity, a form of bio reproduction, a branch of the national economy, a means of entertainment, and, in addition, an art, science, business, a complex, multidimensional and multifaceted concept."4.
1 The Universal Declaration of Human Rights, https://www.un.org/en/about-us/universal-declaration-of-human-rights
2 Recommendations on, Tourism Statistics, United Nations Department for Economic and Social Information and Policy Analysis Statistical Division and World Tourism Organization, Statistical Papers, Series M No. 83, http://unstats.un.org/unsd/publication/Seriesm/SeriesM_83e.pdf
3 "Methodological manual for tourism statistics", Eurostat, 2014, p. 16.
4 Mc. Intosh. R.W., Tourism principles, practices, philosophies. Colunbas (Ohio), 1977, p. 55.
In general, it can be summarized that a departure is considered as tourism when there is a permanent change of environment. In addition, tourism needs a specific purpose, which, however, must exclude the tourist making a profit at the destination. The length of stay at the place of departure (at least one overnight stay) is also very important. Tourism can be considered a rather complex sector due to the inclusion of almost all infrastructures of the economy. The variety of available tourist services starts from a few days of relaxation in a normal environment, to luxurious parties, from simple excursions, to chartering a boat for travel.
Tourism provides the economy with differentiated (diversified) development opportunities, stimulates the growth of employment in the country and, of course, directly affects the improvement of local infrastructure. Tourism also allows businessmen to promote new businesses and create new products. It also has an important social function. Tourists mainly want to see the real image of the country, which promotes the preservation of cultural heritage. All this gives reason to assume that tourism, especially for the economies of small and developing countries, is a real opportunity for development, which needs to be used to its full potential.
Research Methodology. The theoretical, informational, and methodological basis for the given research are the works of Armenian and foreign economists, classical and modern economic theories about international tourism, reports and strategic programs of Armenian state bodies, and reports of state, private and international organizations. The sources for the collection of information were the Statistical Committee of the Republic of Armenia and publications of international organizations such as the World Tourism Organization, World Travel & Tourism Council, etc.
In this paper, the author used two research methodologies: quantitative and qualitative. Also, for a comprehensive understanding of the issue, the author used the methods of statistical, mathematical (graphic), comparative, structural, and econometric analysis in the framework of this research. With quantitative methods, the author carried out a statistical analysis to answer the research questions as well as, and the primary situational analysis was carried out using quantitative methods. With qualitative methods, the author made observations and content analysis. Specific assessments and approaches to both existing and current and predicted situations were given according to the qualitative methodological composition of the article. There are two methods used in economic theory: the hypothetical-deductive method, used principally by neoclassical economists, and the historical-deductive method, adopted by classical and Keynesian economists. Both are legitimate, but since Economics is a substantive, not a methodological science, whose object is the economic system, the last method is adequate. The hypothetical-deductive permits that the economist, starting from some basic assumptions - principally the maximizing agent, deduces a consistent and mathematical theory, but at the cost of realism and relevance. So, in this article, the author also used the main idea of the hypothetical-deductive method.
Findings, Analyses. Along with developing various forms of international economic relations, international tourism has become one of the leading sectors of the national and world economies. International tourism is a way to increase national wealth and improve the quality of life of the country's population. In addition, tourism plays a huge role in the field of employment in the country, creating new jobs that are directly or indirectly related to the sector. Effective organization and management of international tourism can stimulate the overall level of economic development of the country.
The current challenges of the development of the world economy and the socioeconomic situation in Armenia make the promotion of the country's competitiveness relevant and vital, which can become the basis for the differentiation of individual industries and spheres of the economy with excellent export potential. From this point of view, before the spread of the COVID-19 virus, tourism was one of the Armenian economy's dynamically developing and promising sectors. Especially considering the direct and indirect impact of the tourism sector, it can contribute to solving several socioeconomic problems. In this framework, the right marketing policy for Armenia has strategic importance for tourism development. First, implementing a targeted marketing policy means actively representing Armenian tourism products in various international tourism exhibitions, cooperating with well-known international magazines and television, and using all possible advertising mechanisms.
As the international and Armenian experience shows, the tourism sector is one of the essential sources of attracting investment flows, thanks to which it is possible to reduce the level of unemployment in the country, ensure an increase in the income of the population, as well as to supplement the income part of the state budget.
The official statistics of the field of tourism in the Republic of Armenia is conducted by the Statistical Committee of the Republic of Armenia. However, the study shows that, despite the methodology of managing tourism statistical data developed by the World Tourism Organization, there are still several problems in this direction in Armenia related to the non-comprehensive or incomplete nature of the data reflecting the field.
Graph 1 shows that from 2001-2021, the average annual growth rate of the number of international tourists arriving in Armenia was 15.1%.
The annual growth rates of international tourists arriving in Armenia slowed down in 2008-2009 due to the global financial and economic crisis. Thus, if in 2007, the annual growth compared to the previous year was 34%, then in 2009, the number of international tourist arrivals increased by only 3% compared to the previous year. Of course, this is quite normal, considering Armenia's 14.1% economic decline in the same year.
2000000 1800000 1600000 1400000 1200000 1000000 800000 600000 400000 200000 0
60.00 40.00 20.00 0.00 -20.00 -40.00 -60.00
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International tourist arrivals
annual growth
Graph 1. The number of international tourists arriving in Armenia and the annual growth rate, 2001-20215
During 2010-2014, the double-digit growth rate of tourist arrivals to Armenia was restored, averaging 16%. A decrease in international tourist arrivals was also recorded in 2015 (about 1% compared to the previous year) when the number of international tourists arriving in Armenia was 1,192,120. In the period of 2016-2019, the number of international tourists in Armenia increased by 12.3% on average.
Graph 2. The structure of the geographical distribution of tourists visiting Armenia, 2014-2021 (%)6
Compared to 2001, the number of international arrivals in Armenia increased 13 times in 2021, making 1.5 million people. The COVID-19 pandemic and the resulting restrictions have directly impacted international tourist flows
5 Statistical Committee of RA, https://www.armstat.am/am/?nid=13
6 Statistical Committee of the RA, https://www.armstat.am/file/article/sv_01_16a_421.pdf https://www.armstat.am/file/article/sv_01_20a_421.pdf https://www.armstat.am/file/article/sv_01_18a_421 .pdf https://www.armstat.am/file/article/sv_01_22a_421.pdf
arriving in Armenia. As a result, international tourist flows decreased by 44.8% in 2020 compared to the previous year. In the months following the Russian-Ukrainian conflict in 2021, an unprecedented flow of Russian and Ukrainian tourists began to Armenia. The number of tourists increased by 52.6% compared to the previous year.
The study of the geographical distribution of tourists visiting Armenia in 2021 shows that 41.5% of the total are tourists visiting Armenia from the Russian Federation. For comparison, let's note that the number of international tourists from Russia in 2019 was 22.7% of the total number of tourists. In 2021, the next largest share of international tourists arrived from Iran, 11% of the total (5% or 114,811 people in 2019).
As a result of the analysis of the number of international tourists according to the purpose of the visit, it was revealed that the purpose of 52.3% of those arriving in 2021 was rest and entertainment, and those who visited for business purposes made up 25.8% of the total. For comparison, let's note that in 2020, those who visited for business purposes made up 15.8% of the total tourist flows7.
In general, global tourism's rapidly growing competitive environment requires significant investments in the infrastructure, hospitality facilities, tourist attractions, and human resource development. Investments in the tourism sector are a stimulus for many sectors of the economy. If they are skillfully planned and managed, they can be integrated into the sustainable development goals of the environment and tourism. In this regard, the Armenian government should develop a tourism investment strategy that will best reflect the sector's needs and consider various economic, financial, legal, and socio-cultural circumstances specific to the country.
Governmental support is required to take more effective steps in the field because private tour operators or agencies can't provide the advertising and the significant financial resources needed for the country's branding. The problem here is the time lag between tourism expenses and repurchasing them in the economy. And the fact that these expenses are returned to the economy several times more is proved by a number of researches and analyses. For example, the analysis conducted by the WTO revealed the strong links between the expenses for a country's advertising and the increasing cash flow in the tourism sector8. The analysis in the six selected countries showed that $ 1 of the state budget, which is spent on advertising, comes back $493 due to the expenses made by tourists, and about $ 74 comes back as tax revenue. It should also be noted that for marketing tourism products, first of all it is necessary to point out the hospitality and the quality of tourism services provided in Armenia.
Moreover, it is important not only how many people see the advertisement about Armenia, but also how many times they see it. The Arizona Tourism Office has conducted an interesting study, which states that the average American sees more than 3,000 advertisements a day, but only nine of them he really "sees".
7 Statistical Committee of RA, https://www.armstat.am/file/article/sv_01_22a_421.pdf
8 de Souza J., Mendes-Filho L., Buhalis D., Evaluating the effectiveness of tourist advertising to improve the competitiveness of destinations. Tourism Economics, 26(6), 2020, 1001-1020, p. 25.
So, in order for an advertising campaign in Armenia to be really effective, it is necessary for the tourist to see it at least 27 times. And for that it is necessary to ensure the repetition of the advertisement, visualization through pictures and descriptions.
Marketing strategies enable the development of the country's tourism sector not only through the above-mentioned direct methods and mechanisms, but also through indirect means9. For that reason, they cooperate with individual travel agents and operators, as well as with interested people, social groups, NGOs, schools, church communities. An effective marketing strategy requires deep and context related research in the field of tourism.
Armenia can still clearly be considered a country of unutilized opportunities. Armenia has a huge potential for the development of sanatorium tourism, as it has many sanatorium complexes throughout the country, which is a heritage from the Soviet years. Armenia has great potential for the development of resort tourism, as well as a huge resort complex throughout the country, which is a legacy of the Soviet years. Although many of them really have great potential, there is still a need for additional investment to bring the resorts up to international standards. Armenia is known for its vast mineral resources, 700 of which are currently being studied by relevant specialists. Armenia also has a number of boiling water sources, all of which, combined with mild climatic conditions, have great potential to turn the country into a regional and, in the future, an international health resort center.
In Armenia, the opportunities for rural tourism are clearly outlined, which allows tourists to see with their own eyes the life and traditions of the people living in the villages. If we take into account the fact that a large number of tourists visiting the country are middle-aged people, who seem to have seen everything in their lives, then the presentation of Armenian national traditions is an interesting colorful event for them. And small towns and villages are especially direct bearers of national traditions. Tourists have the opportunity not only to live in the villages, but also to participate in rural activities, to taste the national delicacies and to fully experience the peculiarities of the rural environment. The gradual aging of the population is seen as a threat to tourism. The new "limbo generation" are people who are too old to be young, but obviously too young to be old. This age group represents a significant market potential for Armenia because they have been engaged in a variety of long-term tourism packages.
Winemaking can be considered one of the wonderful ways to develop rural tourism. Armenia is one of the countries with the oldest winemaking history in the world. Our ancestors started making wine 3000 years ago. Viticulture is attractive for agricultural tourism. There are more than 200 varieties of grapes growing in Armenia, and the two most famous places in the Ararat Valley and Yeghegnadzor are for growing special types of grapes.
Adventure tourism is one of the new developing and rapidly spreading tourism industries, where travelers get unexpected impressions and adrenaline.
9 Godfrey K., Clarke J., Tourism development Handbook, London, Continuum, 2000, viii, 232 p.,
p. 59.
Mountain excursions, flights, horseback riding, shelter in forest places and tents, mountain climbing are the most typical examples of adventure tourism. Armenian relief and climatic conditions, the presence of mountains, caves and deciduous forests make it possible for all these to organize.
Considering that Armenia is the first country in the world to adopt Christianity as a state religion, Armenian monasteries and church complexes have a centuries-old history and are located in the most beautiful places of Armenia, which makes it possible to create religious tourism destinations. According to the data provided by the Ministry of IFRS of the Republic of Armenia, by 2020 there were currently 24,225 historical and cultural monuments in Armenia. The preservation and restoration of relevant monuments are essential for the development of historical and cultural tourism. It is no secret that today many monuments are not in good condition or suffer losses as a result of the human factor. The preservation of historical and cultural heritage and the development of tourism based on it are the most important trends in ensuring stable tourism.
Military-historical tourism can be described as general, as a visit to a particular country in order to get acquainted with the military potential, equipment, where famous wars or military actions took place. Currently, monuments of military culture arouse active interest in Poland, the Czech Republic, Germany, France and other European countries. Even a new direction of tourism -military tourism has been formed: In Poland, for example, the Osowiec fortress is visited annually by more than 47 thousand tourists.
After the last 44-day war in Artsakh, Armenia has faced many problems -economic, social, military, territorial and humanitarian. On the other hand, after the war in Artsakh and Armenia, especially in Syunik, Tavush and Lori, preference is given to the development of military tourism, since the world press has very publicized the war, and military tourism has prospects for development in military countries. With its centuries-old, impregnable historical fortresses and proofs of its military past, Artsakh is a real opportunity for military-historical tourism development. Along with the assessment of the great potential of military tourism, it should be noted that the implementation of this model requires large-scale private and public investments.
The development of production is an vital component for increasing the competitiveness of tourism industry. Meanwhile, for development of production it is required to have diversification of production, innovation activity, investments and other conditions.
Improving the quality of tourism services is a key condition. Thus, for this reason, Armenia should make lots of efforts on increasing competitiveness of tour operators and overall small and medium entrepreneurships. A prerequisite for the high quality of tourism services for tourists is how they are welcomed in the country of arrival. That is why it is necessary to pay special attention to the quality of services provided at airports. In addition, the infrastructures of airports should be in accordance with international standards. The quality of life in the country of arrival and the level of social justice are important for the tourist.
The price competitiveness and the affordability of the country of arrival are also important for the provision of competitive tourism services. It is very important for a tourist to identify the country with certain events, sights or even people (Paris - the city of love, India - the Taj Mahal, Italy - the land of spaghetti, Spain - the land of bullfighting, New York - the city of skyscrapers, Dubai - the city of the largest musical fountains, etc.). Historical and cultural heritage is a potential resource for tourism development in any region. This is especially important for Armenia, as the competent use of historical and cultural potential can lead to increased investment attractiveness in Armenia. Patriotic upbringing, interest in the country's history and culture, knowledge of one's own traditions and values are the cornerstones without which it is impossible to achieve the formation of the country's brand, which results in the development of a competitive and highly attractive tourism industry.
A necessary condition for the development of competitiveness of the tourism industry is human capital, the provision of relevant skills and abilities. The efficiency of the workforce and the establishment of tourism training centers in the country will ensure the qualitative progress of human capital.
The study of the experience of tourism development in different countries shows that the achievements in this field are largely due to the effectiveness of state policies of individual countries. In general, one of the most important preconditions for the development of tourism is the investment of state funds to discover the tourism potential of the country. State tourism programs should be aimed at the development of tourism business, tourism centers, the necessary infrastructure and ensuring access to information. Especially, for developing countries, like Armenia, private sector can't handle all the investments by itself. All this makes the issues of tourism regulation quite complex subject which needs in-depth studies. On the other hand, there is no common strategy that will ensure the positive effects of tourism on the economies of countries10. However, it is clear that there are certain aspects that deserve special attention if the country wants to maximize the economic benefits of tourism. First of all, the state bodies should focus on having qualified labor force in tourism industry. Formal and non-formal education of qualified labor force is a necessary precondition for the sustainable and effective development of tourism. In addition, the centralization of state regulation is important in ensuring the investment flows of small and medium-sized enterprises serving tourism. Effectively managed tourism can improve the country's economy and change the status quo. But at the same time, it can have the opposite effect. Thus, on the one hand, tourism promotes the discovery of cultural identity and its international spread. On the other hand, tourism flows can lead to the assimilation of cultural values, traditions and customs into common public morals.
Conclusions: In the case of developing countries, like Armenia, the obvious positive effect of tourism is an increase in the general level of education and knowledge of the population, and an increase in the atmosphere of tolerance in
10 Lea J., Tourism and Development in the Third World, Routledge, London and New York, 1998, p. 85.
the country due to active tourism flows. In this case, it is very important to identify all the factors that can contribute to the sustainable development of developing countries. The primary benefits of tourism are job and income creation and, ultimately, an improvement in overall living conditions. At the same time, the activation of tourism in the country has a certain price that countries pay. The ambiguous impact of tourism on the preservation of countries' environment and cultural heritage, the emergence of social tensions should not be underestimated. It turns out that the boundaries between the positive and negative effects of tourism are very weak, it is necessary to properly balance with targeted state regulation. Effective tourism planning becomes crucial, which is a three-tier mechanism: national, local, personal planning. The functions of state bodies are to clarify the main directions of tourism development, to define a common vision, and to coordinate state regulation programs.
The main essence of the state regulation of tourism is to make tourism a priority for the Armenia's economy. The state support of the tourism sector and the creation of a favorable environment make it possible to develop an effective tourism industry, promote potential tourism destinations, ensure the international recognition of the country, as well as ensure the safety of international tourists in the country. Thus, as the results of our research showed, in countries with a stable tourism industry, the role and participation of the state in the regulation of the sector is quite active. The reason for this is the huge importance of tourism in the development of countries and the creation of national income. This is due to the fact that the tourism sector ensures the rapid attraction of financial resources - active turnover, activates the investment climate in the country, creates additional jobs, as well as a chain reaction to the development of other sectors of the economy. In general, an effective competitive environment for tourism is one of the most important preconditions for the development of the sector, in which almost all countries of the world are involved. This suggests that the study of competitiveness, the analysis of potential and the identification of problems are key to the economic development of countries.
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РО!: 10.52174/1829-0280_2022.6-129 ШОГИК МЕДЖЛУМЯН
Аспирант кафедры экономики и международных экономических отношений Ереванского государственного университета
Основные пути развития международного туризма в Республике Армения.- Основная цель статьи - провести всесторонний анализ путей и возможностей развития индустрии международного туризма в Армении. В этом контексте с помощью методов анализа исторических рядов, сравнительного анализа автор представил туристические процессы в Армении, выделив необходимость государственного регулирования сферы. Автором статьи сделан вывод о том, что эффективность международного туризма и конкурентоспособность страны (в данном случае Армении) во многом зависят от соответствующей государственной политики, а также от выявления потенциала отрасли. В странах со стабильной туристической отраслью роль и участие государства в регулировании отрасли достаточно велики. Кроме того, туризм имеет серьезные социальные последствия, от воздействия микросреды на семью до воздействия на общество в целом.
Ключевые слова: туризм, международная конкурентоспособность, маркетинговая стратегия, политика государственного регулирования, сельский туризм, военный туризм, культурно-познавательный туризм ]Е_: _83, М38
РО!: 10.52174/1829-0280_2022.6-129
