Top

3.1 Democratic Representation
3.2 Lack of Corruption
3.3 Efficient Administration
In-Country Assessment Information

Because of the high cost of compliance and strong tendency to operate informally, those small businesses that try to operate legally suffer from unfair competition. This is especially the case where a competitor is a large company able, by bribery or fraud, to avoid the costs of complying with the laws and official rules and thus can undercut those who try to comply. There is also a history of large oligarchic groups obtaining properties at artificially low prices.

The enforcement of competition-promoting laws remains largely ineffective. The Constitution guarantees free economic competition and there are laws to prohibit anti-competitive agreements. A special enforcement authority, the State Commission for the Protection of Economic Competition (members are appointed by the President) has also been in place since 2001, created by the Law on Protection of Economic Competition. The Commission is supposed to adjudicate, issue warnings, impose sanctions and penalties and initiate court proceedings. Although nominally independent from other state bodies, the commission lacks the administrative capacity and resources to effectively enforce pro-competition legislation.

 

Goal – A popularly elected government free of corruption and functioning efficiently and transparently enough to guarantee economic freedom to individuals and support equitable property markets
back to top

3.1 Democratic Representation

 

Core Question: Does the country have free and open elections for the leadership and can citizens engage in free enterprise? Yes – Weak, the freedom to operate a business is well protected, but the abuse of power among officials remains rampant.

3.1.1 Voice & Accountability

3.1.1.1 Are citizens able to elect their government and do they enjoy freedom of expression, association and a free media? No – Weak – Percentile Rank – 26.1 Trend ↑

Sources:Governance Matters, World Bank – www.govindicators.org

3.1.1.2 Are citizens free to form political and civic organizations free of state interference and surveillance? Yes – Weak – Score 5.88 out of 10 Overall Ranking – 109th out of 167 Trend ↑

Source:The Economist Intelligence Unit Democracy Index 2010 – http://graphics.eiu.com/PDF/Democracy_Index_2010_web.pdf

3.1.2 Public Information

Overall Ranking – Moderate; Score 72 out of 100 (2009)

3.1.2.1 Are there regulations governing conflicts of interest in the executive and legislative branches of government? Yes – Executive Score 53 out of 100 – Very Weak; Legislative Score 63 out of 100 – Weak

3.1.2.2 Can citizens access legislative processes and documents? Yes – Score 69 out of 100 – Weak

Source:Global Integrity Report – http://report.globalintegrity.org/Armenia/2009

3.1.3 Market Intervention

Overall Freedom Ranking – Very Strong 36th out of 179 Trend↑

3.1.3.1 To what extent does the government intervene in the private sector including state owned industries? Score 85.7 out of 100 with a higher score indicating less intervention

3.1.3.2 To what extent does the government control prices? Score 76 out of 100 with a higher score indicating less control

Source:2011 Index of Economic Freedom – Heritage Foundation – www.heritage.org/index/Country/Armenia
back to top

3.2 Lack of Corruption

 

Core Question: Is the public sector transparent and free of corruption? No – Weak, Burdensome bureaucratic procedures and discretionary decisions by individual officials encourage petty corruption.Transparency

3.2.1 What is the perceived level of corruption in the country? Weak – Ranking – 123rd out of 178; Score 2.6 out of 10 Trend ↓

Source:Corruption Perceptions Index, Transparency International – www.transparency.org/policy_research/surveys_indices/cpi/2010/results

Integrity Mechanisms
3.2.2 A National Integrity System is a framework where the principle institutions that contribute to integrity, transparency and accountability in a society can address corruption in a systematic way. Does a National Integrity System exist? Yes – Weak, None of the NIS pillars function effectively (2003).

Source:National Integrity System Assessment, Transparency International – http://archive.transparency.org/policy_research/nis/nis_reports_by_country

Extralegal Payments
3.2.3 How often do companies report that officials and/or companies expect additional payments to “expedite” services or gain business? Often – Weak, corruption is entrenched within state institutions, particularly the courts.

Source:Enterprise Surveys, World Bank, 2007, http://www.enterprisesurveys.org/Data/ExploreEconomies/2009/armenia

back to top

3.3 Efficient Administration

 


Core Question: Are quality services and qualified civil servants available to the public through the efficient use of public money? Yes – Strong, substantial economic reforms have led to considerable gains in income growth and poverty reduction while maintaining macroeconomic stability.

Size of Government
3.3.1 What is the size of government relative to GDP? 21.8% – 25 to 30% considered optimum – Very Strong

Civil Service
3.3.2 What is the quality of the civil service? Strong – Score 86 out of 100

Source: Global Integrity Report – http://report.globalintegrity.org/Armenia/2009 Government Effectiveness

3.3.3 What is the overall effectiveness of the government? Strong – Percentile Ranking – 57.1 Trend ↑

Source:Governance Matters 2009, World Bank, www.govindicators.org
back to top

In-Country Assessment Information

 


FQ19: What is the actual experience of small businesses in dealing with the government, particularly the number and complexity of required procedures and the prevalence of extra payments to facilitate services such as licenses or permits?

The corruption problem in the property markets system involves large oligarchic groups connected with high-level officials obtaining properties at artificially low prices.Generally no problems were reported with obtaining licenses. The process requires several steps (application, payment and getting license). Again this requires time and in some cases extra payments. Small businesses report that government officials are not very friendly