Raffi Kojian at Cilicia.com’s Life in Armenia has an albeit short post on Armenia’s ranking by the Wall Street Journal and Heritage Foundation which once again paints a rosy picture of the climate for investment. Still, it appears as though the rankings are more based on legislation passed rather than actual investment or indeed, whether the laws actually function.

Well the good news is Armenia ranks 32nd in the world in Economic freedom by The Wall Street Journal and the Washington-based Heritage Foundation, 2007 rankings. It tries to take into account Armenia’s corruption and poor property rights, but I don’t know if they were given enough weight. In any case, the laws in Armenia are quite good… now, they just need to be followed.

Raffi links to the RFE/RL news item that details this news, but also lists some of Armenia’s major failings. As Raffi implies, if only these laws would work. Morever, the rankings do apparently show a decline even in terms of its rating on paper.

Armenia continues to boast a more liberal and open economy than most countries in Europe and the former Soviet Union, according to an annual survey released by two conservative U.S. institutions on Tuesday.

[…]

“Armenia is ranked 19th freest among the 41 countries in the European region,” concludes the study. “Armenia’s score puts it above Europe’s average—an impressive feat for an impoverished landlocked country.”

The rankings, topped by Hong Kong for a 13th consecutive year, are based on 10 factors of economic freedom such as the level of government intervention, trade and monetary policy, property rights and business regulations. Armenia’s overall score of 69.4 percent, measured on a scale of 100 percentage points, is considerably down last year’s level. Still, it remains the highest in the Commonwealth of Independent States. Even European economic powerhouses like France and Italy were assigned lower grade.

[…]

The index primarily takes account of the legal framework for doing business in a particular country. Many analysts would argue that existing laws and regulations are often irrelevant to economic realities in Armenia where virtually all wealthy businessman are still dependent on government connections due to serious problems with the rule of law.

WSJ/Heritage researchers appear to have partly acknowledged this fact, putting Armenia’s scores in the Property Rights and Freedom from Corruption categories well below the world’s average. “The [Armenian] judiciary is influenced by the executive and is also underdeveloped and corrupt, substantially impeding the enforcement of contracts,” they said.

Critics will also counter that the low level of tax revenues, worth between 15 and 17 percent of Gross Domestic Product, is in fact a major deficiency that results in a highly uneven distribution of the benefits of Armenia’s double-digit economic growth. The International Monetary Fund and the World Bank have long been pressing the Armenian government to tackle what is widely seen as the result of widespread tax evasion. President Robert Kocharian admitted the gravity of the problem at an extraordinary meeting with top government officials last week.

Actually, and I’m sure like many other countries in the former Soviet bloc, this seems to be Armenia’s perennial problem. That is, all the legislation is in place, but when will it actually mean anything in terms of rule of law, anti-corruption initiatives, democracy, human rights and actual investment. Sure, it’s getting better, but solve the issue of the rule of law and see what could be.

Meanwhile, one area of the economy that does have enourmous potential for growth is in the tourism sector, and Armenia Blog posts the two videos currently being shown on CNN to sell the republic as a holiday destination. I’ve already posted Azerbaijan’s ad, but have so far not seen Georgia’s, but Armenia’s looks good. Very promising, although the music could have been a little more exciting, but anyway.

As Rhyne says, I’d visit, but wait a minute, I’m already here. Anyway, I’m embedding them below as well. Northern Avenue looks clinical, lifeless and unappealing, though. Still, not bad and nicer than the Azeri one, I think. Now, if only there were more options for tourists on a budget.