| Before independence, Armenia's economy was largely | | | | making, information and communication technology, and |
| industry-based – chemicals, electronics, | | | | even tourism are beginning to supplement more |
| machinery, processed food, synthetic rubber, and | | | | traditional sectors in the economy, such as agriculture. |
| textile – and highly dependent on outside | | | | This steady economic progress has earned Armenia |
| resources. Agriculture contributed only 20% of net | | | | increasing support from international institutions. The |
| material product and 10% of employment before the | | | | International Monetary Fund (IMF), World Bank, |
| breakup of the Soviet Union in 1991. The republic had | | | | European Bank for Reconstruction and Development |
| developed a modern industrial sector, supplying | | | | (EBRD), and other international financial institutions (IFIs) |
| machine tools, textiles, and other manufactured goods | | | | and foreign countries are extending considerable |
| to sister republics in exchange for raw materials and | | | | grants and loans. Loans to Armenia since 1993 exceed |
| energy.[22] | | | | $1.1 billion. These loans are targeted at reducing the |
| Armenian mines produce copper, zinc, gold, and lead. | | | | budget deficit, stabilizing the currency; developing |
| The vast majority of energy is produced with fuel | | | | private businesses; energy; the agriculture, food |
| imported from Russia, including gas and nuclear fuel | | | | processing, transportation, and health and education |
| (for its one nuclear power plant); the main domestic | | | | sectors; and ongoing rehabilitation in the earthquake |
| energy source is hydroelectric. Small amounts of coal, | | | | zone. The government joined the World Trade |
| gas, and petroleum have not yet been developed. | | | | Organization on February 5, 2003. But one of the main |
| Like other newly independent states of the former | | | | sources of foreign direct investments remains the |
| Soviet Union, Armenia's economy suffers from the | | | | Armenian diaspora, which finances major parts of the |
| legacy of a centrally planned economy and the | | | | reconstruction of infrastructure and other public |
| breakdown of former Soviet trading patterns. Soviet | | | | projects. Being a growing democratic state, Armenia |
| investment in and support of Armenian industry has | | | | also hopes to get more financial aid from the Western |
| virtually disappeared, so that few major enterprises | | | | World. |
| are still able to function. In addition, the effects of the | | | | A liberal foreign investment law was approved in June |
| 1988 Spitak Earthquake, which killed more than 25,000 | | | | 1994, and a Law on Privatization was adopted in 1997, |
| people and made 500,000 homeless, are still being felt. | | | | as well as a program on state property privatization. |
| The conflict with Azerbaijan over Nagorno-Karabakh | | | | Continued progress will depend on the ability of the |
| has not been resolved. The closure of Azerbaijani and | | | | government to strengthen its macroeconomic |
| Turkish borders has devastated the economy, | | | | management, including increasing revenue collection, |
| because Armenia depends on outside supplies of | | | | improving the investment climate, and making strides |
| energy and most raw materials. Land routes through | | | | against corruption. However unemployment still remains |
| Georgia and Iran are inadequate or unreliable. GDP fell | | | | a major problem due to the influx of thousands of |
| nearly 60% from 1989 until 1992–1993. The | | | | refugees from the Karabakh conflict, which currently |
| national currency, the dram, suffered hyperinflation for | | | | stands at around 30%. |
| the first years after its introduction in 1993. | | | | In the 2006 Transparency International Corruption |
| Nevertheless, the government was able to make | | | | Perceptions Index (CPI), Armenia ranked 93rd of 163 |
| wide-ranging economic reforms that paid off in | | | | countries. According to this poll, corruption in Armenia |
| dramatically lower inflation and steady growth. The | | | | has increased only slightly since it was first ranked in |
| 1994 cease-fire in the Nagorno-Karabakh conflict has | | | | the 2003 report. Armenia ranked 80th on the 2006 |
| also helped the economy. Armenia has had strong | | | | UNDP Human Development Index, the highest among |
| economic growth since 1995, building on the turnaround | | | | the Transcaucasian republics. In the 2007 Index of |
| that began the previous year, and inflation has been | | | | Economic Freedom, Armenia ranked 32nd, ahead of |
| negligible for the past several years. New sectors, | | | | countries like Portugal and Italy. |
| such as precious stone processing and jewelry | | | | |