Factor analysis contributing to the development of business environment abroad and its application capabilities in the Republic of Armenia

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Factor analysis contributing to the development of business environment abroad and its application capabilities in the Republic of Armenia

Kyureghyan Arpine Mekhak:

NAS RA Economist at the Institute of Economics after Kotanyan

Gevorgyan Gevorg

Магистр кафедры экономики

Резюме

business environment armenia corruption

Факторный анализ, способствующий развитию бизнес-среды за рубежом и ее прикладных возможностей в Республике Армения

Несмотря на позитивные изменения в Республике Армения, по-прежнему существует много проблем, которые препятствуют развитию бизнес-среды. Среди них можно выделить вопросы, связанные с выдачей разрешений на строительство, трансграничной торговлей, кредитами, контрактами, интересами инвесторов, которые также обусловлены коррупционными рисками, теневой экономикой, налоговым администрированием и политической позицией.

Ключевые слова: бизнес-среда, рейтинговая оценка, регистрация собственности, защита инвесторов, налоговые платежи, доступ к кредитам, коррупционный риск

Summary

Despite positive changes in the Republic of Armenia, there are still many problems that hinder the development of the business environment. Among them, one can underline the issues related to construction permit issuance, cross-border trade, loans, contracts, investors' interests, which are also conditioned by corruption risks, shadow economy, tax administration and political stance.

Key words. business environment, rating assessment, property registration, investor protection, tax payments, access to credit, corruption risk

There are different definitions of the concept of "business environment", the content of which seems to coincide¹:

For example, according to Phil Kelly's business environment is the whole of all the conditions and events that surround and affect the latter Дергунов А. Системный подход развитию национальной инновационной цреды. Инновации N3.2008 53-56 с. Phil Kelly and Ashwin “The Business Environment”, 2013, pp.78-81.:

According to another definition, the business environment is an integral part of economic, social, political or institutional conditions for effective economic policy implementation Fernando A.C. “Business Environment ” ,Pearson Education,2011, pp. 33-36:

In order to present the business environment in Armenia and the challenges that hinders it, it is necessary to address the ratings of Armenia in international authoritative research aimed at creating a favorable business environment and increasing the transparency of the regulatory environment.

The World Bank and the International Finance Corporation publish the Doing Business Annual Reports. The report contains a summary of dozens of business performance indicators in 190 countries around the world that relate to the development of small and medium-sized businesses, business environment and business rules. As a major factor influencing the business environment, you can consider the main indicators of Doing Business's business development that define the degree of ease of doing business in a country.

• Property registration,

• Starting business startup conditions;

• investor protection,

• construction permit issuance;

• tax payments,

• Access to credits,

• electrical connection;

• Use of contracts,

• Settlement of insolvency issues;

• ease of driving international trade;

Summary of the 10 submitted procedures is a business assessment of the country's business environment, which also creates opportunities and prerequisites for attracting foreign investors, implementing new investment programs and ensuring sustainable economic growth.⁵:

In Armenia, according to the World Bank and International Corporation report 2012-2017, the tax payment process has become easier, as a result of the introduction of a single income tax, which includes the social payments of employers and employees and the income tax paid by individuals. Procedures for initiating a business startup in the Republic of Armenia, property registration, tax payments, construction permits, accessibility of loans, ease of international trade, investor protection and contractual procedures affect the business environment (see Table 1).

Table 1Armenia's Indicators for Doing Buainess Reports 2008-2017

Table 2. The Republic of Armenia and the various countries are included in the rating list of the "Doing Business” report for 2016-2017

Particularly, the 2008-2017 tax payments, property registration and ease of international trade have had a more significant impact on the results of the implementation report.

Referring to the 2017 Doing Business ranking, it turns out that Armenia has taken the 38th place among 190 countries with ease of doing business, improving its position by 5th place compared to last year. Belarus occupies the 37th place with 13 th place in comparison with last year, Russia has occupied the 40th place, having reduced its position by 4th place compared to last year, and Kazakhstan's position on "Business" has improved its position in the 2017 rankings 16th place, occupying the 35th place. Kyrgyzstan is in the 75th place (Table 2).Three of the indicators of the RA have made progress, 3 - backwards, and 4 positions remained unchanged.

Only 3 points were registered in the Republic of Armenia with "Construction Permits" and "Settlement of Insolvency" by 81 and 78 respectively. The regress of the "investor protection" index was 53 points, which can be a serious problem for further development of the country, as the investor sees the recession, calculating its risk, does not want to invest in the country in the future, that is, the decline in this index will lead to the reduction of investment flows. The country's position remained unchanged in terms of "Starting Business Startups", "Property Registration", "Tax Payments" and "Ease of Driving International Trade", which occupy the 9th, 13th, 88th and 48th respectively Armenia improved its positions by 22 points at the same time with the "affordability of credits", occupying the 20th place. Progress in the "Electrical connection" indicator made up 9 points - 76th, and "Contract application" - 7 points, making the 28th place, which indicates the improvements to the business environment.

References

business environment armenia corruption

1. Дергунов А. Системный подход развитию национальной инновационной среды. Инновации N3.2008 53-56 с.

2. Phil Kelly and Ashwin “The Business Environment”, 2013, pp.78-81.

3. Fernando A.C. “Business Environment ” ,Pearson Education,2011, pp. 33-36

4. Djankov S., Freund C.,Cong S. Pham. Trading on Time // Review of Economics and Statistics.-2010. - N92(1) -p. 116-173

5. Основа для доклада " Doing Buainess World

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