The process of privatization in Armenia : research project

Abstract

One of the main goals during the process of transition to market oriented economy is increase in the efficiency of enterprises’ performance. Emergence of private owners is also very important. The reforms in Armenia’s economy started and are going on under deep crisis conditions. Low efficiency, lack of levers stimulating active entrepreneurial activities, structural disproportions and deficit of resources don’t facilitate recovery and effective performance of economy. Negative results of price liberalization and sharp decrease in purchasing power at the first stage of market reforms have sharpened the solvency problem and brought up the problem of mass bankruptcy of enterprises. All these difficulties were intensified owing to Karabagh war and blockades in Armenia, which brought to energetic crisis in Armenia. Despite all these difficulties Armenia is moving to free market economy. Privatization as one of the important levers of transition period is yet in process. More than 1500 large and medium size enterprises are already privatized. However, many of them do not have experience to compete in market economy. So, one of the primary problems for these enterprises is the implementation of effective mechanisms of management used in market economies. To find out obstacles for progress in the sector of industrial manufacturing, we have to look at the following environments: • Macro (or external) environment • Micro (or internal) environment The assessment and analysis of these environments for different industries are the preliminary conditions ensuring long-term economic growth. To estimate the real state of privatized enterprises we will use SWOT analysis, analyzing main industries in manufacturing sector (Chemicals and pharmaceutical; Electronics, electric and machinery; Light industry; Food processing; Furniture industry). The study is based on two parallel investigations: 1. a detailed examination of the process followed by Armenia in privatizing the industrial manufacturing sector, covering years 1991-2000 and 2. A follow-up sample survey of 25 privatized enterprises in that sector.