Rural Clusters: Promoting Structural Transformation in Armenia

Abstract: The purpose of this thesis was to investigate the possibility of application of the cluster based rural development approach in Armenia to promote its structural transformation. Case study was selected as a research methodology, and both qualitative and quantitative methods were employed. Analysis of the key findings from the ‘field’, i.e. - the potential cluster, shows that rural households practice a livelihood strategy, that was named here as “minimal production -ensured consumption” strategy. Rural smallholders diversify their livelihoods, but this diversification is of defensive character. Obstacles and local potential for cluster activation were also analyzed, as well as the projection of further developments was provided. From the ‘common’ list of constraints this study identified two specific ones that have to be targeted first in the given rural context. Based on the analysis on macro, meso and micro levels, general criteria for rural cluster formation in Armenia have been proposed. Those criteria are not fixed and should/can be amended depended of the specifics of rural areas within the country. As a result, this exploratory case study concludes with a proposition that clusters can be viewed as a way to overcome mini-economy effect in the context of Armenia, so that rural clusters unify separated economic potential in rural areas and promote regional development, which will transform the country’s economy in the long run (structural transformation).