Economy of Armenia - History of The Modern Armenian Economy

History of The Modern Armenian Economy

Armenia emerged from the umbra of the former Soviet Union in 1991 and migrated from a centrally planned economy (Communist system) to a market economy (capitalist system). Both the nation and the economy are nascent. Regional conflict retards economic growth. In addition, the border with Turkey is closed, making access to sea ports difficult and transportation logistics challenging to a country largely dependent upon imports. In 2003, Armenia became a member of the WTO. The nation is making substantial progress in privatizing ownership of what used to be state-owned industries under the former Soviet system. Despite marked progress, Armenia still suffers from a large trade imballance and is still largely dependent upon foreign aid and remittances from Armenian nationals working abroad, and members of the diaspora donating aid through non-governmental organizations (NGOs) such as churchES. There are some foreign capital inflows, but no robust foreign investment. Despite progress since the Soviet era, the unemployment rate still hovers near 30% and there remains a huge gulf between actual and potential Gross Domestic Product.