By Emil Danielyan and Harry Tamrazian in Prague
Armenia continues to have one of the most liberal business environments in the former Soviet Union and the only “mostly free” economy in the Commonwealth of Independent States, according to an annual survey by two influential U.S. organizations.
The latest joint study by the Wall Street Journal and the Heritage Foundation again ranks 161 countries of the world on ten different factors, including trade and monetary policy, government intervention in the economy, banking and property rights. Armenia and seven other states, including Hungary, share the 44th place in their "2003 Index of Economic Freedom" released on Wednesday. Moldova, which holds the 92nd place, comes a distant second in the CIS rankings.
Armenia’s overall score of 2.65 points, measured on a five-point negative scale, represents a slight progress from last year, making it, together with Lithuania, the second fastest improving country in the history of the WSJ/Heritage rankings.
The study singles out the easing of fiscal burden and what it sees as a more liberal monetary policy pursued by the Armenian authorities over the past year. Furthermore, it concludes that Armenia, along with Hong Kong, Singapore and Estonia, has the most open trade regime in the world.
“Armenia's economic growth has been strong since independence despite a lack of political stability, ongoing tensions with Azerbaijan and Turkey, and failure to reduce corruption and restructure the energy sector,” write the survey’s authors. They note that foreign investors have “the same right to establish businesses as native Armenians in most sectors of the economy.”
The study continues to classify the world’s economies into the “free,” “mostly free” and “repressed” categories. According to the WSJ and Heritage, of all CIS countries only Armenia has a “mostly free economy.” Neighboring Azerbaijan and Georgia are in the 104th and 113th places respectively and are both considered "mostly unfree" from the economic perspective.
The authors of the global study say that its findings substantiate their belief in economic liberalism and free trade. “The countries with the most economic freedom also have higher rates of long-term economic growth and are more prosperous than are those with less economic freedom,” they conclude.
However, Armenia appears to be an exception from that rule for the time being. Despite seven consecutive years of robust economic growth, it still lags behind many countries of the world in terms of living standards and GDP per capita. And Western donor states and organizations frequently criticize its government for not ensuring the rule of law and improving the investment climate.