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Economy of Armenia

Before independence, Armenia's economy wasprocessing and jewelry making, information
largely industry-based – chemicals,and communication technology, and even
electronics, machinery, processed food,tourism are beginning to supplement more
synthetic rubber, and textile – andtraditional sectors in the economy, such as
highly dependent on outside resources.agriculture.
Agriculture contributed only 20% of net
material product and 10% of employment beforeThis steady economic progress has earned
the breakup of the Soviet Union in 1991. TheArmenia increasing support from international
republic had developed a modern industrialinstitutions. The International Monetary Fund
sector, supplying machine tools, textiles,(IMF), World Bank, European Bank for
and other manufactured goods to sisterReconstruction and Development (EBRD), and
republics in exchange for raw materials andother international financial institutions
energy.[22](IFIs) and foreign countries are extending
considerable grants and loans. Loans to
Armenian mines produce copper, zinc, gold,Armenia since 1993 exceed $1.1 billion. These
and lead. The vast majority of energy isloans are targeted at reducing the budget
produced with fuel imported from Russia,deficit, stabilizing the currency; developing
including gas and nuclear fuel (for its oneprivate businesses; energy; the agriculture,
nuclear power plant); the main domesticfood processing, transportation, and health
energy source is hydroelectric. Small amountsand education sectors; and ongoing
of coal, gas, and petroleum have not yet beenrehabilitation in the earthquake zone. The
developed.government joined the World Trade
Organization on February 5, 2003. But one of
Like other newly independent states of thethe main sources of foreign direct
former Soviet Union, Armenia's economyinvestments remains the Armenian diaspora,
suffers from the legacy of a centrallywhich finances major parts of the
planned economy and the breakdown of formerreconstruction of infrastructure and other
Soviet trading patterns. Soviet investment inpublic projects. Being a growing democratic
and support of Armenian industry hasstate, Armenia also hopes to get more
virtually disappeared, so that few majorfinancial  aid  from  the  Western  World.
enterprises are still able to function. In
addition, the effects of the 1988 SpitakA liberal foreign investment law was approved
Earthquake, which killed more than 25,000in June 1994, and a Law on Privatization was
people and made 500,000 homeless, are stilladopted in 1997, as well as a program on
being felt. The conflict with Azerbaijan overstate property privatization. Continued
Nagorno-Karabakh has not been resolved. Theprogress will depend on the ability of the
closure of Azerbaijani and Turkish bordersgovernment to strengthen its macroeconomic
has devastated the economy, because Armeniamanagement, including increasing revenue
depends on outside supplies of energy andcollection, improving the investment climate,
most raw materials. Land routes throughand making strides against corruption.
Georgia and Iran are inadequate orHowever unemployment still remains a major
unreliable. GDP fell nearly 60% from 1989problem due to the influx of thousands of
until 1992–1993. The nationalrefugees from the Karabakh conflict, which
currency, the dram, suffered hyperinflationcurrently  stands  at  around  30%.
for the first years after its introduction in
1993.In the 2006 Transparency International
Corruption Perceptions Index (CPI), Armenia
Nevertheless, the government was able to makeranked 93rd of 163 countries. According to
wide-ranging economic reforms that paid offthis poll, corruption in Armenia has
in dramatically lower inflation and steadyincreased only slightly since it was first
growth. The 1994 cease-fire in theranked in the 2003 report. Armenia ranked
Nagorno-Karabakh conflict has also helped the80th on the 2006 UNDP Human Development
economy. Armenia has had strong economicIndex, the highest among the Transcaucasian
growth since 1995, building on the turnaroundrepublics. In the 2007 Index of Economic
that began the previous year, and inflationFreedom, Armenia ranked 32nd, ahead of
has been negligible for the past severalcountries like Portugal and Italy.
years. New sectors, such as precious stone



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