Econometric Evaluation of Freight Transportation Cost Reductions through Route Optimization in the Logistics System of the Republic of Armenia

Abstract

The logistics system of the Republic of Armenia is currently undergoing a phase of active development.  However, from a logistical standpoint, the country faces a number of significant challenges, including an unfavorable geographic location, declining agricultural production volumes, blockaded borders to the east and west, the absence of direct access to the sea, and consequently, some of the highest transportation costs in the region. These factors present serious barriers to Armenia’s economic growth and regional competitiveness. Thus, the current article aims to assess the economic viability of proposed road infrastructure projects in Armenia through practical econometric modeling. The results of these economic-mathematical calculations yield multifactor indicators that can serve as a preliminary justification for the construction of new logistics infrastructure in the coming years. Such infrastructure development is anticipated to enhance Armenia’s role in international trade and act as a strategic driver for the multi-sectoral growth of the country›s provinces, reinforcing their significance and integration within the broader regional framework.