In a context where global foreign investment increased by 10.9% in 2013, in particular in Europe (+25.2%) and in Latin America (+17.5%), FDI flows to developing economies reached a new high of US$759 billion. However macroeconomic fragility and policy uncertainties are driving investors to caution.
Since the Soviet Union broke up in 1991, Armenia has made a great progress towards the liberalization of its economy. According to the World Bank, Armenia is ranked first amongst CIS (Commonwealth Independent States) countries in terms of FDI appeal. In effect, the government recently established conditions and laws which are favorable to foreign investments, and because of its economic dynamism, the country has earned the nickname of "The Caucasian Tiger". However, due to the crisis, FDI has dropped 30%, going from USD 1.1 billion in 2008 to USD 700 million in 2009. This decrease has continued since then, to reach 489 millions USD in 2013. The country remains strongly dependent on the economic health of the Russian economy and of the EU.
Russia, France and the Netherlands are the three major investors in Armenia. The three sectors covered by these investments are energy, telecommunications, metallurgy, hotel services and air transportation. Significant investments were also made by the Armenian communities living outside the country (nearly 6 million people).
The crisis affected the foreign investment flow, but the support of international organizations has allowed investors to maintain their confidence towards the country.
Information on the 2013 FDI influx in this region can be accessed in the Global Investment Trade Monitor published in January 2014 by the United Nations Conference on Trade and Development (UNCTAD).
|Armenia||Eastern Europe & Central Asia||United States||Germany|
|Index of Transaction Transparency*||6.0||7.0||7.0||5.0|
|Index of Manager’s Responsibility**||6.0||5.0||9.0||5.0|
|Index of Shareholders’ Power***||6.0||9.0||5.0|
|Index of Investor Protection****||6.7||5.9||8.3||5.0|
Source: Doing Business - Last Available Data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
|Foreign Direct Investment||2011||2012||2013|
|FDI Inward Flow (million USD)||515||489||370|
|FDI Stock (million USD)||5,103||5,134||5,448|
|Performance Index*, Ranking on 181 Economies||74||-||-|
|Potential Index**, Ranking on 177 Economies||136||-||-|
|Number of Greenfield Investments***||21||19||22|
|FDI Inwards (in % of GFCF****)||19.5||20.8||14.8|
|FDI Stock (in % of GDP)||50.3||51.6||51.7|
Source: UNCTAD - Last Available Data.
Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.
However, foreigners can only lease land and need permission to lease land on a long-term basis.
Any Comments About This Content? Report It to Us.
© Export Entreprises SA, All Rights Reserved.
Last Updates: October 2014