Growth Challenges and Government Policies in Armenia

This report reviews growth trends in
Armenia for the period 1994-2000, outlines major weaknesses
of existing development patterns, and suggests a package of
policy recommendations designed to accelerate enterprise
restructuring, attract investment, and encourage the
creation of new businesses in the medium term (three to five
years). Such steps are needed to sustain (and preferably to
increase) the current growth rates, to stop emigration among
the young and skilled, and to reduce poverty. The government
needs to focus much more clearly on generating the
environment for private sector led growth by removing
bottlenecks in policies, infrastructure, and institutions
that prevent new private businesses from flourishing.
International aid donors can help by supporting the removal
of administrative barriers for investments, the
rehabilitation of infrastructure, and the creation of
"restructuring agencies" that will enable firms in
key sectors to overcome or avoid common constraints to
business growth in Armenia. Successful restructuring by such
firms should have a demonstration effect on the
country's economy and help consolidate public support
for moving forward the program of reform begun a decade ago.