According to the 2016-Index of Economic Freedom published by the Heritage Foundation, this time, Armenia is considered to be “moderately free”. According to the report of the Foundation, Armenia ranks the 54th among 178 countries. Last year, our country ranked the 52th line. However, this Foundation has given quite good scores to Armenia by the numbers of separate spheres. For example, 83.8% – for fiscal freedom, 80.0% – for investment freedom, 80.7% – for government spending. The indicators by such international structures regarding any country’s economy should have interested more to foreign investors. Can the indicators provided by this Foundation influence on bringing investments in our country and do the scores given to our country by the Heritage Foundation meet the reality?
Economist Artak Manukyan is of the opinion that the 2016 Index of Economic Freedom by the Foundation does not mirror the true economic snapshot of Armenia. According to Manukyan, the Heritage Foundation’s score slightly yields the score of Fitch by its qualitative assessment and of other international well-known organizations’ score, “Because scores, by large, affect the interest rates on loans and the index characterizing the level of the risk in the country. The Index of Economic Freedom does not have such a targeting.”
It looks strange for the economist that by some indexes, Australia which by the Heritage Foundation score ranked the 5th among 178 countries, is behind Armenia by some indexes, “In particular, by fiscal freedom and government spending, Australia has low indexes than we, but by investment freedom, Australia and we have received 80%. In other words, our laws are pretty free for the investments like Australia. But if you compare the quality of the government spending and the efficiency of fiscal freedom, Armenia and Australia are incomparable. Meanwhile, the unemployment rate in Australia is 6%, while in Armenia – 17%. Moreover, Australia attracts more foreign investment per capita – about 19 times more than Armenia.”
According to the economist, these indexes suggest that these scores are provided based on the existing laws, as to how these laws are applied in Armenia, they are not scored in any number. “Having the same index with Australia is ridiculous because we cannot compete with Australia by any indicator: law-enforcement formula,” said the economist. In his words, we can write the best laws in the world but the practice does not reinforce it in any way. The scores by this Foundation may perhaps give an overall snapshot of the country, but for the business decision-makers, it is important to know the level of risk of given country and the practicability.
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Nell BABAYAN
