Regional Potential of Armenia for SMEs Clustering: an Empirical Evidence

Abstract

The process of clustering of small and medium-sized enterprises (SMEs) is complex and multidimensional, as well as risky and costly. The purpose of this study is to empirically substantiate the presence of regional potential for clustering of SMEs in the Republic of Armenia (RA) by evaluating the most appropriate set of indicators from the available variety. The quantitative analysis encompasses the following measures: Kim’s Location Quotient, Krugman’s Concentration Quotient, shift-share indicator with quotient of national shift, industrial mix and regional shift, structural shift along with the Gini’s Localization Quotient. The data were obtained from the database of the Statistical Committee of the Republic of Armenia (SCRA), which, however, did not fully encompass a detailed knowledge base concerning all economic sectors of the country’s regions. This served as a limitation for the study. In addition, there exist no similar quantitative studies on the problems of regional diagnostics of Armenia in the scientific literature. The study made it possible to identify promising regions for SMEs clustering in RA. The obtained results can be applied in future for a more specific study of opportunities of forming a supercluster that will unite the potential of several regions of RA at once.