Under the old Soviet central planning system, Armenia had developed a modern industrial sector, supplying machine tools, textiles, and other manufactured goods to sister republics in exchange for raw materials and energy.

Since the implosion of the USSR in December 1991, Armenia has switched to small-scale agriculture away from the large agro industrial complexes of the Soviet area. The agricultural sector has long-term needs for more investment and updated technology. The privatization of industry has been at a slower pace, but has been given renewed emphasis by the current administration.

Armenia is a food importer, and its mineral deposits (gold, bauxite) are small. The ongoing conflict with Azerbaijan over the ethnic Armenian-dominated region of Nagorno-Karabakh and the breakup of the centrally directed economic system of the former Soviet Union contributed to a severe economic decline in the early 1990s. By 1994, however, the Armenian Government had launched an ambitious IMF-sponsored comprehensive economic structural reform program which has been successfully implemented. As a result there has been consistent growth since 1994, while since 2001 the GDP growth rate is above 10% every year. In 2003 the growth rate was 13.9%.

Armenia has a successful record of transition creating a favorable macroeconomic climate based on a market economy.