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