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The Transition in Armenia
USAID/E&E/POProgram Office
Bureau for Europe and EurasiaU.S. Agency for International Development
February 2005
Economic and Democratic Reforms in 2004
Eco
no
mic
Ref
orm
s
Democratic Reforms
EU-15
EU-15
Ratings are based on a 1 to 5 scale, with 5 representing most advanced. USAID drawing from Freedom House, Nations in Transit 2004 (2004), and EBRD, Transition Report 2004 (November 2004).
Mac
Alb
Cro
SerBos
Bul
Rom
Southern Tier CEE
Kos
Mont
Northern Tier CEE
Hun
Pol Lat
CzeEst
SlnSlkLit
Eurasia
Rus
Tkm
MolKyr
Kaz
Uzb
Taj
Bel
Ukr
1
2
3
4
5
1 2 3 4 5
GeoArm
Aze
First Stage Economic Reform
Infrastructure, 2.3
Non Bank Financial
Reform, 2.0Banking
Reform, 2.3
Competition Policy, 2.0
Enterprise Reform, 2.3
012
34
5Second Stage Economic Reform
Average of Northern TierAt Graduation
Large Scale Privatization,
3.3
Price Liberalization ,
5.0
Small Scale Privatization,
4.0
Trade and Foreign
Exchange, 5.0012345
First Stage Economic Reform
Average of Northern TierAt Graduation
Economic Reform in Armenia in 2004
Ratings are based on a scale from 1 to 5, with 5 representing the best score. USAID, Monitoring Country Progress in CEE & Eurasia #9 (2004 forthcoming) drawing from EBRD, Transition Report 2004 (November 2004).
Average of Romania &
Bulgaria(2002)
Large Scale Privatization,
3.3
Price Liberalization ,
5.0
Small Scale Privatization,
4.0
Trade and Foreign
Exchange, 5.0
12345
Average of Romania &
Bulgaria(2002)
Second Stage Economic Reform
Infrastructure, 2.3
Non Bank Financial
Reform, 2.0Banking
Reform, 2.3
Competition Policy, 2.0
Enterprise Reform, 2.3
12
34
5
Private Sector Share of GDP 1990-2004%
of
GD
P f
rom
Pri
vate
Sec
tor
EBRD, Transition Report 2004 (November 2004 and earlier editions).
10
15
10 9
15
0
10
20
30
40
50
60
70
80
Azerbaijan Georgia Armenia Eurasia Northern TierCEE
1990
20 20
40
25
54
1994
45
60 60
48
70
1998
60
65
70
55
76
2002
60
65
75
56
76
2004
Democratic Reforms in Armenia in 2003
Ratings are based on a scale from 1 to 5, with 5 representing the best score. USAID, Monitoring Country Progress in CEE & Eurasia #9 (2004) drawing from Freedom House, Nations in Transit 2004.
Average of Romania
and Bulgaria(2002)
Civil Society, 3.5
Independent Media, 2.3
Governance / Public Admin,
2.6
Rule of Law, 2.4
Corruption, 1.9
Electoral Process, 1.9
1
23
4
5
Average of NT CEE
at graduation
Civil Society, 3.5
Independent Media, 2.3
Governance / Public Admin,
2.6
Rule of Law, 2.4
Corruption, 1.9
Electoral Process, 1.9
1234
5
Democratic FreedomsD
emo
crat
ic F
reed
om
sg
rea
ter
fre
ed
om
s
Ratings from 1 to 5, with 5 representing greatest development of political rights/civil liberties. The data are an aggregation of Freedom House’s political rights and civil liberties indices; Freedom House, Freedom in the World 2005 (2005 and previous editions).
Northern Tier CEE
Armenia
Georgia
Southern Tier CEE
Eurasia
Azerbaijan
1
2
3
4
5
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Economic and Democratic Reforms in Armenia
Eco
no
mic
Ref
orm
s
Ratings are based on a 1 to 5 scale, with 5 representing the most advanced. USAID drawing from EBRD, Transition Report 2004 (November 2004) & Freedom House, NIT (2004).
Democratic Reforms
1
2
3
4
5
1 2 2 3 3 4 4 5 5
1995
1992
93-94
19971996
1991
20002001
1998-99
0320042002
Microsoft PowerPoint
Presentation
Freedom House, Nations in Transit 2004 (2004); Ratings from 1 to 5, with 5 representing greatest progress in democratic reforms.
Democratic Reforms in ArmeniaD
emo
crat
ic R
efo
rms
grea
ter
refo
rms
1
2
3
4
5
Civil Society Independent MediaGovernance &Pub. Admin.
Rule of Law Electoral Process Anti-Corruption
1996 1998 2000 2002 2003
Transparency International, Corruption Perceptions Index 2004 (2004). Ratings on a 1 to 10, with 10 representing least amount of corruption.
Corruption Perceptions in 2004C
orr
up
tio
n P
erce
pti
on
s In
dex
(Transparency International)
10
9
8
7
6
5
4
3
2
1
3.1
AR
ME
NIA
2.0
GE
OR
GIA
1.9
AZ
ER
BA
IJA
N
1.51.5
2.22.3
2.8
3.94.2
4.8
7.5
9.7
Fin
land
US
A
Italy
El S
alva
dor
Bra
zil
Moz
ambi
que
Sie
rra
Leon
e
Sud
an
4.0
4.6
6.06.0
Slo
veni
a
Est
onia
Lith
uani
a
Latv
ia
2.52.72.7
2.93.1
3.5
4.1
Bul
garia
Cro
atia
Bos
nia
& H
erz
Rom
ania
Mac
edon
ia
Ser
bia
& M
ont
Alb
ania
2.02.22.22.22.3
2.8
4.6B
elar
us
Rus
sia
Uzb
ekis
tan
Kaz
akhs
tan
Ukr
aine
Kyr
gyzs
tan
Taj
ikis
tan
Hai
ti
Ban
glad
esh
World Bank, Anticorruption in Transition 2, Corruption in Enterprise-State Interactions in Europe and Central Asia 1999-2002 (2004).
Bribes in Businesses in Europe &Eurasia%
3.8
3.3
2.8 2.8
1.4
0.9 0.9
0.4
3.43.3
2.83.0
3.3
2.32.4
2.2
0
1
2
3
4
5
Kyrgy
zsta
n
Albania
Azerb
aijan
Georg
ia
Russia
Armen
ia
Czech
Rep
ublic
Estonia
1= N
ever
, 6=
Alw
ays
0
1
2
3
4
5Bribes as Share of
Revenue 2002Bribe Frequency
1999 & 2002
3.33.4
3.9
2.9 2.8
3.1
2.8
2.4
Kyrgy
zsta
n
Albania
Azerb
aijan
Georg
ia
Russia
Armen
ia
Czech
Rep
ublic
Estonia
4.2
1999 2002
World Bank, Anticorruption in Transition 2, Corruption in Enterprise-State Interactions in Europe and Central Asia 1999-2002 (2004).
Share of Captor Firms in 1999 & 2002%
0
10
20
30
40
50
60
Azerbaijan Georgia Lithuania Bosnia &Herz
Russia Bulgaria Armenia
World Bank, Anticorruption in Transition 2, Corruption in Enterprise-State Interactions in Europe and Central Asia 1999-2002 (2004).
Degree of Impact of State Capture in 2002
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
Armen
ia
Kazak
hsta
n
Russia
Hunga
ry
Belaru
s
Estonia
Poland
Sloven
ia
Czech
Rep
ublic
Azerb
aijan
Lithu
ania
Ukrain
e
Roman
ia
Croat
ia
Kyrgy
z Rep
ublic
Slovak
Rep
ublic
Mol
dova
Uzbek
istan
Georg
ia
Latvi
aSaM
Tajikis
tan
Albania
Bulgar
iaBiH
FYR M
aced
onia
Ind
ex
World Bank, Doing Business in 2005 (2004).
Starting and Closing a Business
Days to Start a Business
Years to Close a Business
0
25
50
75
100
125
150
175
200
225
2 5
Austra
lia
United
Sta
tes
25
Armen
ia
25
Georg
ia
36
61
Russia
Sloven
ia
123
Azerb
aijan
152 155
203
Brazil
Congo
Haiti
01
Irelan
d
Canad
a
2
Armen
ia
3
Azerb
aijan
3
United
Sta
tes
3
Georg
ia
2
6
9
Russia
Belaru
s
Czech
Rep
ublic
10
India
0
1
2
3
4
5
6
7
8
9
10
Days to Register a Business
Years to go Through Bankruptcy
Economic Performance and Human Capital in 2002-2004
USAID, MCP#9 (2004) drawing from World Bank, World Development Indicators 2004 (2004); UNICEF, Social Monitor 2004 (2004); EBRD, Transition Report (November 2004); Ayyagari, Beck, and Demirguc-Kunt, Small and Medium Enterprises across the Globe: A New Database, World Bank Policy Research Working Paper 3127, (August 2003).
Eco
no
mic
Per
form
ance
Human Capital
Southern Tier CEE
Ser
CroAlb
Rom
Bos
MacBul
Mont
Northern Tier CEE
Lat
Lit
Est Hun
Slk
Cze
Pol
Sln
Uzb
Taj
Kyr
Tkm
Kaz
Rus
Ukr
Mol
Eurasia
Bel
1
2
3
4
5
1 2 3 4 5
Aze
Geo
Arm
Ratings are based on a scale from 1 to 5, with 5 representing the best score. USAID, Monitoring Country Progress in CEE & Eurasia #9 (2004) drawing from World Bank, World Development Indicators 2004 (2004); EBRD, Transition Report (November 2004), M. Ayyagari, T. Beck, and A. Demirguc-Kunt, Small and Medium Enterprises across the Globe: World Bank Policy Research Working Paper 3127, August 2003. SME data no later than 1998.
Economic Performance Index in Armenia in 2002 - 2004
External Debt % GDP, 3.5
Share of employment in
SMEs, 0.5
Export share of GDP, 1.0
FDI pc cumulative,
1.5
GDP as % 89 GDP, 3.0
3 Year Avg Inflation, 4.5
Private Sector Share, 4.5
12345
Average of NT CEE
at graduation
External Debt % GDP, 3.5 Share of
employment in SMEs, 0.5
Export share of GDP, 1.0
FDI pc cumulative,
1.5
GDP as % 89 GDP, 3.0
3 Year Avg Inflation, 4.5
Private Sector Share, 4.5
1
2
3
4
5
Average of Romania
and Bulgaria(2002)
1989
= 1
00Real GDP as % of 1989 GDP
EBRD, Transition Report (November 2004).
Georgia
Northern Tier CEE
Southern Tier CEE
Eurasia
Armenia
Azerbaijan
20
30
40
50
60
70
80
90
100
110
120
130
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Employment, Real Wages and GDP in Armenia(as % 1989)
1989
=10
0
EBRD, Transition Report 2004 (November 2004 and earlier editions); UNICEF, Social Monitor 2004 (October 2004); and UNECE, Economic Survey of Europe, 2004 No. 2 (2004).
GDP
Employment in Industry
Employment
Real Wages
0
20
40
60
80
100
120
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
0
10
20
30
40
50
60
70
80
25
Northern Tier CEE
Less Baltics
37
Southern Tier CEE
38
Baltics
44
Eurasia
Informal Economy in 2002-03%
of
the
Siz
e o
f G
DP
Schneider, Friedrich, “The Size of the Shadow Economies of 145 Countries all over the World: First Results over the Period 1999 to 2003 (December 2004).
8
UnitedStates
15
Canada
49
Armenia
61
Azerbaijan
68
Georgia
48
El Salvador Bolivia
68
Peru
61
Cumulative Foreign Direct Investment 1989-2004
US
$ p
er c
apit
a
EBRD, Transition Report (November 2004).
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Czech
Rep
ublic
Estonia
Hunga
ry
Slovak
ia
Sloven
ia
Latvi
a
Poland
Lithu
ania
Croat
ia
Bulgar
ia
FYR Mac
edon
ia
Roman
ia
Albania
Serbia
& M
onte
negr
o
Bosnia
-Her
zego
vina
Azerb
aijan
Kazak
hsta
n
Russia
Turkm
enist
an
Mold
ova
Belaru
s
Ukrain
e
Kyrgy
zsta
n
Uzbek
istan
Tajikis
tan
Georg
ia
Armen
ia
World Bank, World Development Indicators (2004); UNICEF, Social Monitor 2004 (October 2004).
Remittances as % GDP%
GD
P
World Bank
0.2
UNICEF
1617
13
6
4
0
5
10
15
20
25
30
17
12
1.3
Yemen El Salvador Mexico
1413
9
32
0.6
Albania Bosnia Serbia &Montenegro
Georgia Macedonia Armenia EMU
9
IMF10
National Statistics Survey of Republic of Armenia
25USAID Funded Study
In Migration and Out Migration in the World
World Bank, World Development Indicators (2004). Migration and emigration are calculated as residuals from total population change less the natural change in population.
Mig
ran
ts p
er 1
,000
per
son
s
E&E
High Income
-0.3
-0.2
-0.1
0.0
0.1
0.2
0.3
0.4
0.5
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
LAC
EMU
Net Migration Rates
-3.5
-3.0
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Mig
ran
ts p
er 1
,000
per
son
s
World Bank, World Development Indicators (2004). Migration and emigration are calculated as residuals from total population change less the natural change in population.
High Income
EMU LAC
Armenia
E&E
Kazakhstan
Albania
World Bank, World Development Indicators (2004). Missing values were interpolated.
Fertility Rates in E&EC
hild
ren
per
Wo
man
Tajikistan
Replacement Rate = 2.1
Kyrgyzstan
Slovenia
Uzbekistan
Albania
Armenia
Azerbaijan
Georgia
Russia
0
1
2
3
4
5
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
UNHCR, 2002 Statistics on Asylum-Seekers, Refugees and Others of Concern to UNHCR (2002).Refugees are foreign persons granted humanitarian status or temporary protection as recognized by the 1951 UN Refugee Convention. Internally Displaced Persons (IDPs) are citizens who have been displaced from their homes and are under the protection of the UNHCR.
Refugees and Internally Displaced Persons (IDPs) By Country of Origin
Ref
ug
ees
and
ID
Ps
per
1,0
00 P
erso
ns
0
50
100
150
200
250
300
350
400375
222
153
Bosnia
-Her
z
91
34
58
Croat
ia
51
46
4
Georg
ia
48
3612
Serbia
-Mon
t
31
2011
Tajikis
tan
348
175
172
Liber
ia
164
35
130
Afgha
nista
n
133
63
71
Somali
a
106
103
3
Leba
non
31
31
0
Colom
bia
IDPs Refugees
107
71
35
Azerb
aijan
60
18
42
Armen
ia
Human Capital Index in Armenia in 2002-03
Ratings are based on a scale from 1 to 5, with 5 representing the best score. USAID, Monitoring Country Progress in CEE & Eurasia #9 (2004) drawing from World Bank, World Development Indicators 2004 (2004); UNICEF, Social Monitor 2004 (2004).
Average of Romania
and Bulgaria(2002)
Secondary School
Enrollment, 2.0
Public Expenditure Education,
0.5Life Expectancy,
4.5
Under 5 Mortality, 3.0
Public Expenditure Health, 0.5
Per Capita Income, 1.5
12345
Average of NT CEE
at graduation
Secondary School
Enrollment, 2.0
Public Expenditure Education,
0.5Life Expectancy,
4.5
Under 5 Mortality, 3.0
Public Expenditure Health, 0.5
Per Capita Income, 1.5
12345
67
68
69
70
71
72
73
74
75
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Life Expectancy at BirthY
ears
fo
r to
tal P
op
ula
tio
n
a. World Bank estimate. b. UNICEF estimate. World Bank, World Development Indicators 2004 (April 2004). Missing data were estimated by interpolation.
Northern Tier CEE
Armenia
Southern Tier CEE
Georgia
Eurasia
Infant Mortality RatesP
er 1
,000
Liv
e B
irth
s
World Bank, World Development Indicators 2004 (April 2004). West NIS consists of Belarus, Moldova, and Ukraine.
1980 1990 1995 2002
23
15 1310
0
10
20
30
40
50
60
70
80
90
100
110
120
Northern TierCEE
43
28
2219
Southern TierCEE
35
21 22 21
Russia
35
27 2724
West NIS
43
29 29 29
Georgia
86 85 84 85
Central AsianRepublics
117
106102
96
Azerbaijan
80
60
49
35
Armenia
Poverty in Armenia%
IMF, Republic of Armenia: 2004 Article IV Consultation, Sixth Review Under the Poverty Reduction and Growth Facility, and Request for Waiver of Performance Criteria (December 2004).
5559
67
51
23
30
35
18
0
10
20
30
40
50
60
70
Total Yerevan Otherurban
Rural Total Yerevan Otherurban
Rural
98/99
51
45
60
49
16 17
21
14
2001 / 2002
43
48
8
2003
Extreme PovertyOverall Poverty
Tuberculosis IncidenceT
B C
ases
per
100
,000
per
son
s
WHO, European Health for All Database (2004).
EU-15
Georgia
Slovenia
ARMENIA
Azerbaijan
Kazakhstan
Kyrgyzstan
Romania
Russia
Ukraine
0
20
40
60
80
100
120
140
160
180
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
0
1
2
3
4
5
6
7
8
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Public Expenditure on Health%
GD
P Romania
Czech Republic
ARMENIA
Georgia
OECD
EMU
UNICEF, Social Monitor (2004); World Bank, World Development Indicators (2004).
Azerbaijan
Smoking Prevalence in Adults in 1999-01
World Health Organization; Tobacco Control Database 2004. E&E is a sample of 19 countries.
Per
cen
tag
e
33
21
0
10
20
30
40
50
60
70
80
France
45
16
E&E
Male Female
68
58
48
31
27
3
14
34
1
13
Armenia Ukraine Serbia-Mon. Azerbaijan Czech
Male Female Male Female Male Female Male Female Male Female Male Female
3229
Denmark
Male Female
29
25
UK
Male Female
0
20
40
60
80
100
120
140
160
180
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Tuberculosis IncidenceT
B C
ases
per
100
,000
per
son
s
WHO, European Health for All Database (2004).
EU-15
Armenia
Kazakhstan
Romania
Kyrgyzstan
Georgia
Ukraine
Slovenia
Russia
Azerbaijan
Public Expenditure on Education%
GD
P OECD
Developing Countries
UNICEF, Social Monitor (2004); World Bank, World Development Indicators (2004).
Romania
Poland
ARMENIA
Georgia
Azerbaijan
0
1
2
3
4
5
6
7
8
9
10
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Secondary School Enrollment%
of
15 -
18
po
pu
lati
on
Poland
Gross rates; general secondary plus vocational/technical secondary combined.UNICEF, Social Monitor (2004).
Tajikistan
GEORGIAARMENIA
AZERBAIJAN
Hungary
Croatia
Bulgaria
Russia
AlbaniaMoldova
20
40
60
80
100
120
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Economic Freedom and Ruling Justly in 2003-2004
Drawn from The Millennium Challenge Account dataset. The sample consists of 82 countries. Ratings are based on a 1 to 5 scale, with 5 being the most advanced. Economic freedom consists of six indicators: (a) country credit rating; (b) inflation; (c) regulatory quality; (d) fiscal balance; (e) trade policy; and (f) days to start a business. Ruling justly consists of six indicators: (a) control of corruption; (b) rule of law; (c) voice and accountability; (d) government effectiveness; (e) civil liberties; and (f) political rights.
Mol
Guyana
Haiti
Arm
Aze
GeoTkm
Kyr
TajUkr Benin
Bol
Ghana
Honduras
Burkina
Malawi
Paraguay
Angola
Zimbabwe
1
2
3
4
5
1 2 3 4 5Ruling Justly
Ec
on
om
ic F
ree
do
m
Economic Freedom and Investing in People in 2003 - 2004
Drawn from The Millennium Challenge Account dataset. The sample consists of 82 countries. Ratings are based on a 1 to 5 scale, with 5 being the most advanced. Economic freedom consists of six indicators: (a) country credit rating; (b) inflation; (c) regulatory quality; (d) fiscal balance; (e) trade policy; and (f) days to start a business. Investing in people consists of four indicators: (a) immunization rate (DPT and measles); (b) primary education completion rate; (c) public primary education spending; and (d) public expenditure on health.
Haiti
Arm
AzeGeo
Tkm
Mol
Kyr
TajUkr
Benin
Bol
Ghana
Honduras
Burkina
GuyanaMalawi
Paraguay
Angola
Zimbabwe
1
2
3
4
5
1 2 3 4 5Investing in People
Eco
no
mic
Fre
edo
m
Armenia & MCA in 2003- 2004
Ratings are based on a scale from 1 to 5, with 5 representing the best score. The Sample consists of 82 countries. Data are drawn from The Millennium Challenge Account dataset.
Days to Start a Business,
4.8
Regulatory Quality, 3.8
Trade Policy, 4.0
Fiscal Deficits, 4.2
Credit Rating, 2.0
Inflation, 3.6
012345
Economic Freedom
Median
Control of Corruption,
3.1
Rule of Law, 3.4 Govt
Effectiveness, 3.4
Voice and Accountability,
3.3
Political Rights, 2.9
Civil Liberties, 2.9
01
23
4
5Ruling Justly
Median
Immunization Rates, 4.8
Health expenditure as
% GDP, 2.2
Girls Education
Completion, 4.8
Primary Education
expenditure as % GDP, 1.9
012345
Investing in People
Median