Job creation and productivity growth are at the forefront of the global development agenda. The central challenge today for the government of Armenia is to find new sources of long-term
economic growth to become an upper middle-income country, with a view to experiencing a substantial transformation of its economic structure to one that is resilient to external shocks in the
medium term. A dynamic and vibrant private sector is thus crucial to Armenias economic growth, with firms making new investments, creating jobs, improving productivity, and promoting growth.
Entrepreneurial activity is pivotal to the continued dynamism of the private sector, with the generation of new businesses fostering competition and economic growth. This study seeks to
identify determinants of high-growth entrepreneurial activity. The stusy uses data from the new 2012 World Bank Entrepreneurship Survey conducted to gauge new firm growth in the formal sector
in Armenia and data from World Bank Enterprise Surveys to analyze innovative activity in existing firms. It includes detailed case study analyses to complement these findings. The study finds
that while there is a higher level of entrepreneurial activity in Armenia when compared to its neighbor Georgia, however there remain anumber of constraints that inhibit the growth of
entrepreneurial and innovative activity. These constraints include a major skills mismatch, ineffective industry-research linkages and a lack of access to risk capital. While outlining broad
policy directions in areas namely improving business environment, access to finance, developing skills, incentivizing greater industry- research collaboration, and raising awareness it lays out
some priority areas that the government could embark on. The government could remove bottlenecks from the general business environment that impede able entrepreneurs with good ideas from
starting a new venture and creating jobs. This would include strengthening the business environment to allow failure and company exit as a necessary part of entrepreneurial learning, company
incentives that favor entrepreneurs with good ideas, instruments that enable entrepreneurs to access capital for startups, and intruments to tap into the vast diaspora pool both in terms of
knowledge and capital. We hope that the issues discussed and the dialogue initiated during the course of this study would lend itself to policy design to foster high-growth entrepreneurship
with a view to higher growth and job creation in this highly globalized world.
