Investing in Local Economies: Tourism Powers Jobs and Growth in Armenia

Armenia has long been called an open-air museum. The country's medieval monasteries, historic towns, and ancient folk traditions and customs have long been admired, yet in many regions the economic benefits of tourism have been constrained. Poor roads, limited accessibility, and lack of infrastructure kept many of these sites out of reach, limiting how communities could reap the rewards of inflows of domestic and international visitors.

Recognizing how investing in cultural heritage preservation and conservation could help diversify the country's economy, revitalize rural communities, and reduce poverty, the Government of Armenia and the World Bank have worked together to invest in tourism.

Through the Local Economy and Infrastructure Development (LEID) Project, efforts focused on making selected sites more accessible to visitors: paving and expanding roads across the country; installing ramps, guardrails, outdoor lighting, and seating; restoring the public spaces and establishing regional tourism centers.

Investment Attracts Visitors, Fuels Private Sector Growth

One site impacted by the project was the Marmashen Monastery complex, dating back to the 10th century. Having survived numerous hardships over the centuries, including earthquakes and invasions, this historical site has until recently remained largely inaccessible to visitors who had to travel to it via a dirt road snaking through steep mountain passes. As a result, only about 3,000 visitors a year were making the trek to Marmashen.

Since the upgrade of the route to the monastery, which included paving an access road 2.4 kilometers in length, the number of visitors has surged to more than 40,000 annually. "In 2013, when I was appointed abbot of the monastery, throughout that entire year, we had only two baptisms here," emphasizes Father Paren. "Following the road's renovation, it is not only on Saturdays and Sundays that pilgrims or visitors come to Marmashen for services. Now ceremonies are held every weekday. We have 300-400 worshippers daily."

The LEID Project took a hub-and-spoke approach to investing in 28 subprojects connected to 17 project sites across nine regions of Armenia. This approach connected the main destinations with surrounding locations, increasing the inflow of tourists and expanding the demand for new services in the local communities. These efforts help fuel an influx of tourists for cafe and guesthouse owners, tour operators, taxi drivers, artisans, craft producers, and restaurateurs, LEID's impact meant longer stays, fuller tables, and year-round income instead of seasonal lulls and uncertainty. That surge in spending and private investment by entrepreneurs jumping into the tourism sector translated into tangible job creation in communities across Armenia.

A Reason to Return, Stay, and Build a Future

All this public and private investment in tourism and nearby infrastructure is giving residents a reason to stay and, in some cases, giving Armenians living abroad a reason to return.

The dual shocks of 2020-the COVID-19 pandemic and the conflict with Azerbaijan-disproportionately affected border regions, reversing economic gains in Armenia's south. In the city of Goris, post-conflict fragility threatened several economic sectors and disrupted tourism flows by deepening the sense of instability and increasing the risk of out-migration.

With World Bank support, 36 culturally significant old houses were restored, downtown and historic urban areas upgraded, including streets, energy efficient streetlights, rehabilitation of fountains and parks, and installing benches and wastebins. Private investors followed public upgrades. Hotels expanded, businesses flourished, and the city welcomed unprecedented numbers of domestic and international visitors.

"Many people have opened hotels, seeing that tourism in Meghri is growing," explains Noubar Shakeryan, the founder of Balcony Caffe, who moved back to the town in the country's south, as LEID renovated local urban infrastructure. "I have no regrets about moving to Meghri, or about returning to Armenia. It was the best decision I have ever made."

Tourism has become not just a cultural asset but a resilient engine for growth and jobs capable of absorbing economic, humanitarian and environmental shocks in some regions while sustaining opportunity in others.

With a new tourism development project now underway to scale upon LEID's success and investments in seve tourism clusters across the country, Armenia is building a tourism model that ensures its most precious historical treasures bring resilient economic growth and new opportunities for communities.

Armenia is proving that when public investment in infrastructure connects cultural and natural heritage to markets, it can catalyze jobs and private sector growth.