Editing Economy of Armenia (section)

===Post-communist economic reforms===
Armenia introduced elements of the free market and privatisation into their economic system in the late 1980s, when [[Mikhail Gorbachev]] began advocating [[Perestroika|economic reform]]. To supply the country's basic needs, the first decision was land reform and the privatization of land. This allowed for the emergence of small-parcel agriculture supplying markets and supporting self-sustenance during the period of shortages.<ref name="Sarian 193–222"/> Cooperatives were set up in the service sector, particularly in restaurants, although substantial resistance came from the [[Communist Party of Armenia (Soviet Union)|Communist Party of Armenia]] (CPA) and other groups that had enjoyed privileged position in the old economy. In the late 1980s, much of Armenia's economy already was opening either semi-officially or illegally, with widespread corruption and bribery. The so-called mafia, made up of interconnected groups of powerful officials and their relatives and friends, sabotaged the efforts of reformers to create a lawful market system. When the December 1988 earthquake brought millions of dollars of foreign aid to the devastated regions of Armenia, much of the money went to corrupt and criminal elements.{{sfn|Curtis|1995|p=48–50}}

Beginning in 1991, the democratically elected government pushed vigorously for privatisation and market relations, although its efforts were frustrated by the old ways of doing business in Armenia, the Azerbaijani blockade, and the costs of the [[First Nagorno-Karabakh War]]. In 1992, the Law on the Programme of Privatisation and Decentralisation of Incompletely Constructed Facilities established a state privatisation committee, with members from all political parties. In the middle of 1993, the committee announced a two-year privatisation programme, whose first stage would be privatisation of 30% of state enterprises, mostly services and light industries. The remaining 70%, including many bankrupt, nonfunctional enterprises, were to be privatised in a later stage with a minimum of government restriction, to encourage private initiative. For all enterprises, the workers would receive 20% of their firm's property free of charge; 30% would be distributed to all citizens by means of vouchers; and the remaining 50% was to be distributed by the government, with preference given to members of the labour organisations. A major problem of this system, however, was the lack of supporting legislation covering foreign investment protection, bankruptcy, monopoly policy, and consumer protection.{{sfn|Curtis|1995|p=50}}

In the first post-communist years, efforts to interest foreign investors in joint enterprises were only moderately successful because of the blockade and the energy shortage. Only in late 1993 was a department of foreign investment established in the [[Ministry of Economy (Armenia)|Ministry of Economy]], to spread information about Armenia's investment opportunities and improve the legal infrastructure for investment activity. A specific goal of this agency was creating a market for scientific and technical intellectual property.{{sfn|Curtis|1995|p=50}}

A few Armenians living abroad made large-scale investments. Besides a toy factory and construction projects, diaspora Armenians built a cold storage plant (which in its first years had little produce to store) and established the [[American University of Armenia]] in Yerevan to teach the techniques necessary to run a market economy.{{sfn|Curtis|1995|p=50}}

Armenia was admitted to the [[International Monetary Fund]] in May 1992 and to the [[World Bank]] in September. A year later, the government complained that those organisations were holding back financial assistance and announced its intention to move toward fuller price liberalisation, and the removal of all [[tariff]]s, quotas, and restrictions of foreign trade. Although privatisation had slowed because of catastrophic collapse of the economy, Prime Minister [[Hrant Bagratyan]] informed the United States officials in the fall of 1993 that plans had been made to embark on a renewed privatisation programme by the end of the year.{{sfn|Curtis|1995|p=50–51}}

Like other former states, Armenia's economy suffers from the legacy of a centrally [[planned economy]] and the breakdown of former Soviet trading patterns. Soviet investment in and support of Armenian industry has virtually disappeared, so that few major enterprises are still able to function. In addition, the effects of the [[1988 Spitak earthquake|1988 earthquake]], which killed more than 25,000 people and made 500,000 homeless, are still being felt.<ref>{{Cite book |url=https://www.iitk.ac.in/nicee/wcee/article/10_vol11_7011.pdf |title=Proceedings of the Tenth World Conference on Earthquake Engineering: 19 - 24 July 1992, Madrid, Spain |publisher=Balkema |year=1994 |isbn=978-90-5410-060-7 |editor-last=Asociación Española de Ingeniería Sísmica |location=Rotterdam |pages=7011–7015 |language=en |chapter=Economic and social impacts of Armenia earthquake}}</ref> Although a cease-fire has held since 1994, the conflict with [[Azerbaijan]] over [[Nagorno-Karabakh]] has not been resolved. The consequent blockade along both the Azerbaijani and Turkish borders has devastated the economy, because of Armenia's dependence on outside supplies of energy and most raw materials. Land routes through Azerbaijan and Turkey are closed; routes through Georgia and Iran are adequate and reliable.<ref name=":10">{{Cite book |url=https://books.google.com/books?id=pYsRCgAAQBAJ |title=Commonwealth of Independent States (CIS) Industry: Clothing Industry Directory - Strategic Information and Contacts |publisher=International Business Publications |year=2013 |isbn=978-1-4387-0940-6 |pages=247–248 |language=en}}</ref> In 1992–93, the GDP had fallen nearly 60% from its 1989 level. The national currency, the [[Armenian dram|dram]], suffered [[hyperinflation]] for the first few years after its introduction in 1993.<ref>{{cite web |date=15 August 2012 |title=World Hyperinflations &#124; Steve H. Hanke and Nicholas Krus &#124; Cato Institute: Working Paper |url=http://www.cato.org/publications/working-paper/world-hyperinflations |url-status=live |archive-url=https://web.archive.org/web/20121017012645/http://www.cato.org/publications/working-paper/world-hyperinflations |archive-date=17 October 2012 |publisher=Cato.org}}</ref>

Armenia has registered strong economic growth since 1995 and inflation has been negligible for the past several years. New sectors, such as precious stone processing and jewelry making and communication technology (primarily [[Armenia Telephone Company|Armentel]], which is left from the USSR era and is owned by external investors). This steady economic progress has earned Armenia increasing support from international institutions. The [[International Monetary Fund]] (IMF), [[World Bank]], [[European Bank for Reconstruction and Development|EBRD]], as well as other international financial institutions (IFIs) and foreign countries are extending considerable grants and loans. Total loans extended to Armenia since 1993 exceed [[USD|$]]800 million. These loans are targeted at reducing the budget deficit, stabilizing the local currency; developing private businesses; energy; the agriculture, food processing, transportation, and health and education sectors; and ongoing rehabilitation work in the [[earthquake zone]].<ref name=":10" />

By 1994, however, the Armenian government had launched an ambitious IMF-sponsored economic liberalization program that resulted in positive growth rates in 1995–2005. The economic growth of Armenia expressed in GDP per capita was one of strongest in the CIS. GDP went from $350 to more than $800 on average between 1995 and 2003. Three principal factors explain this result: the credibility of the macroeconomic policies of stabilization, the correction effect following the depression, and the importance of external transfers, in particular since 2000.<ref name="Sarian 193–222"/> Armenia became a member of the [[World Trade Organization]] (WTO) in January 2003. Armenia also has managed to slash inflation, stabilize its currency, and privatize most small- and medium-sized enterprises. Armenia's unemployment rate, however, remains high, despite strong economic growth.<ref name=":10" />

The chronic energy shortages Armenia suffered in the early and mid-1990s have been offset by the energy supplied by one of its nuclear power plants at [[Metsamor]]. Armenia is now a net energy exporter, although it does not have sufficient generating capacity to replace the [[Armenian Nuclear Power Plant|Metsamor]] nuclear plant, which is under international pressure to close due to its old design. The [[European Union]] had classified the [[VVER]] 440 Model V230 light-water-cooled reactors as the "oldest and least reliable" category of all the 66 Soviet reactors built in the former [[Eastern Bloc]]. However the [[IAEA]] has found that the Metsamor NPP has adequate safety and can function beyond its design lifespan.<ref>{{Cite news |title=International Experts Find Adequate Safety At Armenian Nuclear Plant |url=https://www.azatutyun.am/a/24213743.html |access-date=2022-10-07 |website=«Ազատ Եվրոպա/Ազատություն» ռադիոկայան |date=2 June 2011 |language=hy |last1=Harutyunyan |first1=Sargis |archive-date=2022-10-07 |archive-url=https://web.archive.org/web/20221007130336/https://www.azatutyun.am/a/24213743.html |url-status=live }}</ref>

The country's electricity distribution system was [[Privatization|privatized]] in 2002.<ref name=":10" />