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Foreign Investment In Armenia Keeps Falling


Armenia - Workers at a medical items factory in Yerevan recently set up by a Russian company, 14Mar2014.
Armenia - Workers at a medical items factory in Yerevan recently set up by a Russian company, 14Mar2014.
Foreign direct investment (FDI) in the Armenian economy decreased sharply in 2013 for a second consecutive year, according to government statistics released on Tuesday.

Data from the National Statistical Service (NSS) puts it at just over $469 million, down by over 35 percent year on year. FDI inflows into Armenia similarly fell by 20 percent to $725 million in 2012.

Foreign investment in the country has steadily declined since 2007, failing to recover even after the domestic economy began slowly emerging from a severe recession in 2009. Armenian government officials have attributed the downward trend to external factors such as sluggish economic growth in developed nations.

Opposition politicians and independent analysts blame it on Armenia’s flawed business environment and, in particular, a lack of level playing field for all businesses. They say that foreign investors are scared away by a privileged position enjoyed by wealthy government-linked entrepreneurs. The latter control many forms of large-scale and lucrative business.

“The degree of market centralization is high and that repels small and medium-sized investors,” Samvel Avagian, an economist, told RFE/RL’s Armenian service (Azatutyun.am). Avagian cited in that regard the findings of a report released by the World Bank last November.

The report concluded that Armenia has the most monopolized economy in the former Soviet Union and Eastern Europe. It said de facto monopolies control 20 percent of economic activity in the country.

According to the latest NSS figures, the European Union remained in 2013 the main source of foreign investment in the Armenian manufacturing sector. EU countries as well as Switzerland invested between them $144 million in the sector, compared with around $59 million injected by Russian companies.
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