ARMENIA THE 2ND WORST ECONOMY IN THE WORLD- FORBES

Tert.am
06.07.11

(Forbes) – Between 1970 and 2009 per-capita gross domestic product
in Madagascar tripled in after-inflation terms – to a whopping $448,
according to the United Nations. Over that same time period per-capita
GDP in nearby South Africa rose more than sevenfold to $5,700.

A history of military coups, economic mismanagement and steady
population growth has left Madagascar in the dust as other
emerging-market countries like South Africa, India and Brazil surge
ahead. Yet another coup in 2009 forced the U.S. to yank Madagascar
from a preferential tariff program, costing the beleaguered island
nation thousands of jobs in its textile sector. Immunizations and
primary-school completions are dropping, and 77% of the population
now lives in poverty.

It’s manmade problems like this that landed Madagascar on the top
of the Forbes list of the World’s Worst Economies in 2011. There
are worse basket cases (see: Somalia). But among the countries with
relatively complete data tracked by the International Monetary Fund,
Madagascar, sometimes called the “Eighth Continent” because of its
natural diversity, stands out for political mismanagement, corruption,
poverty and lack of growth.

To construct our list, we ranked 177 countries according to three-year
average statistics for gross domestic product growth and inflation
(including the IMF’s 2012 estimates), plus GDP per capita and the
current account balance, a measure of whether the country is importing
more than it exports.

There have been significant changes to the list since last year.

Onetime losers like Ghana and Zimbabwe got their economic acts together
and moved off the list while some countries, including Armenia and
Jamaica, marched into the lower ranks primarily because of the
global financial crisis. Others, like Madagascar and Nicaragua,
earned their positions almost entirely due to the ineptitude of
their rulers. It should come as no surprise that eight of the 10
worst economies also were in the bottom quartile of countries in
Transparency International’s Global Corruption Perceptions Index,
with Guinea, Kyrgyzstan and Venezuela scoring close to the bottom.

“Beyond income, (corruption) extends to economic development,” says
Transparency International’s Robin Hodess, group director for research
and knowledge. “All of the indices that reflect human development
suffer. Where government doesn’t work, economies don’t grow.”

Madagascar’s poor economic performance mirrors the turmoil in
its politics. After gaining independence from France in 1960, the
country went through a brief period of prosperity. But per-capita
GDP has trailed most of the rest of the world since the early 1970s
as Madagascar’s population has grown faster than the economy.

The current round of troubles began in 2009 when democratically
elected President Marc Ravalomanana stepped down under intense
pressure from the military and handed power to opposition leader Andry
Rajoelina. European supporters cut back on $1 billion in promised aid,
and the U.S. was required by law to drop Madagascar from the African
Growth and Opportunity Fund import program, devastating the textile
industry. Much of the country has descended to a barter economy,
according to the U.S. State Dept.

At No. 2 is Armenia, whose economy shrank by 15% in 2009 as an
expatriate-financed construction boom fizzled along with the world
economy. With a mediocre growth forecast for the next few years,
this landlocked former Soviet republic, dependent upon Russia and
Iran for virtually all of its energy supplies, is struggling to keep
up with the rest of the world. Per-capita GDP of $3,000 is less than
a third of neighboring Turkey, and inflation is running at 7%. On top
of that, Russia cut back on supplies of diamonds, hurting Armenia’s
once-thriving diamond-processing industry.

Coming in third is Guinea, a West African nation that sits on half
the world’s accessible bauxite reserves but has trouble attracting
productive investment. Poorly maintained roads, a 2008 military coup
and “insecurity created by government hostility toward investment”
have slowed economic development, according to the U.S. State
Department. The 2010 election of Alpha Conde as president appears
to have reduced fears somewhat, and Abu Dhabi and BHP Billiton are
proceeding with a $5 billion alumina refinery project in northwest
Guinea.

No. 4. Ukraine has rich farmland and generous mineral resources and
could become a leading European economy – yet per-capita GDP trails
far behind even countries like Serbia and Bulgaria. The U.S. State
Dept. blames “complex laws and regulations, poor corporate governance,
weak enforcement of contract law by courts, and particularly
corruption.” Jamaica, coming in fifth, is almost entirely a victim
of the global financial crisis that devastated its vital tourism
industry. On the positive side: Jamaica’s poverty rate has been cut
almost in half to 10% in recent years while literacy has increased
to 88%, according to the World Bank.

Perhaps the cancer that struck dictator Hugo Chavez will bring
deliverance to No. 6 Venezuela, which manages to keep its people poor
despite an embarrassment of natural wealth. The only thing healthy
about Venezuela’s economy is its oil-fueled current account surplus.

An inflation rate of 32% and subpar GDP growth demonstrate the
ineptitude of Hugo’s management. Nicaragua, too, suffers under a
president who purports to support “the people” but has led his nation
into subpar economic performance that only hurts the poor.

Coming in 10th is Iran, which has 10% of the world’s proved reserves
of oil according to the Energy Information Administration. The Islamic
Republic’s economy, hobbled by insider control of vital industries,
international sanctions and mismanagement, is growing at less than a
third the world’s average rate. Per-capita GDP of $5,493 puts Iran
far closer to war-torn Iraq than oil-rich peers like Saudi Arabia
and Kuwait.