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Supporting Investment in the New Armenia

Last Updated: February 2007
IDA at Work: Trade - Supporting Investment in the New Armenia

Challenge

To stimulate the interest of investors in Armenia by building the institutions needed by the private sector in an emerging market economy.

Approach

The Foreign Investment and Export Facilitation Learning and Innovation Loan established a private sector-focused development agency – the Armenian Development Agency (ADA) – as a one-stop shop to streamline transaction processes, work as an intermediary between private sector and government, and promote Armenia’s competitive strengths with a clear investment and export promotion strategy. The Armenian Development Agency came into being just as Armenia joined the World Trade Organization and put into place one of the most liberal foreign investment regimes in the Commonwealth of Independent States.

Results

As an overall measure, the project contributed to foreign investments rising more than ten-fold over the past 10 years, from US$19 million in 1995 to US$252 million in 2005. Similarly, ADA’s export facilitation efforts contributed to an improved export performance from nearly US$270 million in 1995 to just over US$970 million in 2005.

Highlights:
- Established an effective investment and export promotion agency. ADA was ranked among the top five out of 114 developing country investment promotion agencies assessed by the Multilateral Investment Guarantee Agency (MIGA) in 2006.
- Designed and implemented long-term investment and export promotion strategies, including an investor servicing strategy.

Contribution

- US$1 million learning and innovation loan, 2002-05 - Parallel technical assistance from the International Finance Corporation (IFC) and MIGA. Good example of the World Bank Group working together to build institutional capacity.
- Exercised a fiduciary control function, including procurement and financial management oversight to ensure that ADA began on a sound financial footing.
- A series of parallel IDA and IFC investments are aimed at fostering a robust private sector and investment climate in Armenia. For example, the Enterprise Incubator Loan and the Enterprise Development Project helped to strengthen the country’s appeal as an investment destination. Trade and customs policy support under the Poverty Reduction Support Credit contributed to the success of ADA as well. Also in parallel, IDA’s Public Sector Modernization project has helped to modernize and improve the transparency in overall public institutions.

Partners

USAID complemented the project with US$1.2 million in export promotion activities and studies.

Next Steps

ADA is now an effective investment and export promotion agency, primarily funded by the government but also working towards self-sustainability. Discussions are ongoing with other donors to provide supplementary support as well. IDA continues to keep private sector-led development as a central pillar of its approach in Armenia, and IFC has doubled its activities in the country in the past two years.

Learn More

Foreign Investment and Export Facilitation Learning and Innovation Loan
Project documents


For more information, please visit the Projects website.



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