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This study evaluates growth trends in Armenia for the period 1994-2000. It details major weaknesses of existing development patterns, and suggests a package of policy recommendations designed to hasten enterprise restructuring, attract investment, and encourage the creation of new businesses in the medium term (three to five years). This study identifies three elements that represent critical constraints to sustainable economic growth in Armenia: a poor business and investment environment, weak managerial skills, and uncertainty about the country's economic and political prospects in an unstable region.