Armenia in the Eurasian Economic Union: reasons for joining and its consequences

On 3 September 2013, the president of Armenia shifted the long-praised process of initialing political association and economic integration with the European Union and announced Armenia’s decision to join the Russia-led Customs Union and participate in the processes of formation of the Eurasian Economic Union (EAEU). Practitioners and observers interpreted it either as a U-turn or as a surprise move mainly assuming that what happened was the result of Russian pressure on Armenia. However, when tensions and uncertainty eased, it became obvious that what happened was a result of complex reasons. Geopolitical constraints and socio-political problems that had accumulated in Armenia during recent years coincided with an assertive expansion of Russia’s foreign policy. This research provides a number of explanations for that political decision to understand the primary determinants of that move. It also examines the political and economic implications of Armenia’s membership of the EAEU.     

Local Fiscal Strategy to Retain Heterogeneous Firms

This paper is about the strategy of retaining unobservably heterogeneous firms attracted by unobservably valued outside alternatives. We prove that differentiating taxation and public good fiscal packages within one's own locale dominates offering the same packages to all firms. We rationalize the full range of observed practice by considering more than one type of firm, more than one type of fiscal instrument, and all kinds of utility in alternative locations, under asymmetric information. Mobile agents can earn rents under some conditions, and immobile agents earn rents under others. Ways to minimize budgetary exposure in tax wars and effects on the composition of local economies are discussed.