The Armenian economy remains one of the freest in the former Soviet Union thanks to a “relatively efficient” regulatory framework and limited government spending, according to an annual survey released by two conservative U.S. institutions on Thursday.
“The Wall Street Journal” and the Heritage Foundation think-tank rated 177 countries and territories on four criteria of economic freedom, including the rule of law, the size of government and market openness.
Armenia is 38th in their 2013 Index of Economic Freedom, remaining in the group of “moderately free” economies that also comprises France, Spain and Turkey. This is a slight improvement over its position in last year’s WSJ/Heritage rankings.
“Armenia is ranked 17th among the 43 countries in the Europe region, and its score puts it above the world and regional averages,” concludes the survey. It says the country’s performance has improved over the past year mainly because of “the better management of public spending.”
The WSJ/Heritage report also notes a simplification of business procedures, a relatively light tax burden and a “moderate” non-salary cost of labor. But it also points to continuing serious problems with the rule of law.
“Although Armenia performs relatively well in many categories of economic freedom, stronger foundations are needed in areas like judicial independence and government transparency,” it says. “Despite progress in tackling corruption, particularly within the tax and customs administrations, the close relationships within political and business circles raise concerns about cronyism and undue influence by vested interests.”
Accordingly, there was no improvement in Armenia’s position in the survey’s Rule of Law category.
Still, Prime Minister Tigran Sarkisian portrayed the survey as further proof of the Armenian government’s sound economic policies as he chaired a weekly cabinet meeting in Yerevan. “This is one of the most important indexes at the center of investors’ attention, and naturally our improved position in this index will have a significance impact,” he said.
Vahagn Khachatrian, an economist representing the opposition Armenian National Congress (HAK), dismissed this statement, saying that the global survey noted only “technical improvements” that have little bearing on economic conditions in the country.
“The prime minister did not mention the most important parts of the report … As long as there is no independent judiciary and a lot of corruption we won’t feel the effects of economic freedom,” Khachatrian told RFE/RL’s Armenian service (Azatutyun.am).
Sarkisian likewise claimed credit when the World Bank reported a further improvement of Armenia’s problematic business environment in an annual global report released last October. Armenia placed 32nd in the bank’s latest Doing Business rankings, up from 50th place it occupied in 2011.