Armenia: Growth Spillovers through Geography, Institutions, Trade and Linguistic Distance

Abstract

This research paper studies the importance of spatial interaction and dependence of 11 countries on each other to pursue economic growth during 1995-2019. Two spatial models were conducted, the SAR and SEM models, using four spatial weighting matrices: geography, institutions, trade and linguistic distance. The results generated from this methodology showed that geography and trade are the most significant channels of growth spillovers between two countries. Armenia’s and its neighboring countries’ GDP per capita growths decreased during this period, the reason can be due to increasing government spending and growth convergence. The study concludes with a summary of the whole paper and some open ended questions on the ongoing Russia-Ukraine and Armenia-Azerbaijan-Turkey wars, and the importance in integrated a political aspect when conducting a spatial analysis.