ERMC/AUA.: State of the Environment Armenia

Map - Administrative Devisions.

Armenia, with its multy-branched economy, had been one of most developed countries in the former USSR. The productive capacity and resources had developed in the sustainable way: covering only 0.13% of USSR territory and having 0.8% its of productive resources, Armenia contributed to the total national output as 1.2%. By these times, the most urgent problems in Armenia were environmental protection and rational use of productive resources. The latter problem relates to the uneven development of country's regions. In some regions where productive capacity and resources rate had been highest, the industrial infrastructure and public service were underdeveloped, thus creating the serious problems with employment. The other problems by that times related to development of production resources. In 1975-1988, yearly average 1.4-1.5% of productive resources had moved out of production. The recreation resources had been weakly used, so had the public service. Regardless of all, prior to the collapse of Soviet Union, the economy of Armenia had developed in the sustainable way.

The devastating earthquake of 1988 (affected some 40% of country's area), the collapse of Soviet Union and numerous social-economic factors resulted in decrease of economic production in the country in 1991 as 85% of 1988. The economic decline had been closely tied to severe energy crisis.

The physical production volume index decreased continually and then stabilized by 1994 (1985=100).

In 1992 the sharp increase of production and services price took place in Armenia. The wholesale prices of industrial production in December 1992 exceeded the prices recorded in November for 12.1 times. Most significant increase had been recorded in the following branches of economy: oil production (for 130.3 times), non-ferrous metallurgy production (25.2), energy production (31.5), chemical production (17.4), construction materials (19.4), machinery production (12.1) and food production (13.1).

In 1995-1997 the volume economic production stabilized.

In 1997, the volume of industrial production manufactured in Armenia amounted for 149% compared with 1993. If in 1993 some 81% of local production was exported to the former Soviet Republics, in 1997 this figure dropped to 40.7% (including Russia - 27.1% and Turkmenistan - 6%), while exports to foreign countries made up 59.3%, including Belgium- 20.2%, Iran - 18.3%, Germany - 4.1%, USA - 3.1% and Netherlands - 2.7%.

The main import production includes the following:

• Food products, livestock production - 30-33%
• Machinery and mechanisms - 9.3-11.4%
• Raw materials - 22.3 - 23.6%

In 1996-1997 29.8 - 31.6% of imported products and 26.5-31.5% of exported products are associated to enterprises of public sector.

The Armenian National Currency the dram was introduced in November 1992 at the rate 200 rubles = 1 dram

• Economic Incentives.