Armenia’s economy remains “moderately free” despite a slight worsening of its regulatory environment observed in the past year, according to an annual survey conducted by two conservative U.S. institutions.
“The Wall Street Journal” and the Heritage Foundation think-tank rated 178 countries and territories on four criteria of economic freedom, including the rule of law, the size of government and market openness.
Armenia is 41st in their 2014 Index of Economic Freedom, remaining in the group of “moderately free” economies that also comprises France, Spain and Turkey. It occupied 38th place in last year’s WSJ/Heritage rankings.
The authors of the latest survey said that Armenia’s overall score has declined by 0.5 point from last year due to “combined deteriorations in investment freedom, business freedom, and fiscal freedom.” But they noted that this score is still above the world and regional averages.
“Over the 20-year history of the Index, Armenia has improved its economic freedom score by 26.7 points, the fourth largest score increase,” says the survey.
“Nonetheless, substantial challenges remain, particularly in implementing deeper institutional and systemic reforms that are critical to strengthening the foundations of economic freedom,” it adds. “Both the protection of property rights and freedom from corruption are far below world standards, and the legal framework continues to be weak.”
Artak Baghdasarian, a senior official at the Armenian Ministry of Economy, played down the lower score assigned by the WSJ/Heritage, saying that it only reflects a lack of drastic improvements in Armenia’s business environment. “We need to have considerable progress in order to avoid regressing [in the rankings,]” he told RFE/RL’s Armenian service (Azatutyun.am).
The Armenian government has repeatedly pledged to strengthen the rule of law and create a level playing field for all businesses in recent years. The World Bank has registered some progress in this area in similar surveys conducted on an annual basis. Officials from the bank as well as the International Monetary Fund caution, however, that more needs to be done to make the Armenian economy attractive to investors.
Ashot Khurshudian, an economist with the Yerevan-based International Center for Human Development (ICHD), believes that the authorities in Yerevan continue to give preferential treatment to wealthy government-linked entrepreneurs. “Statements are one thing and actions another,” Khurshudian said, adding that “oligopolies” still control much of economic activity in the country.