Khrushchev's rule in the Soviet Union was marked by continual experiments in government and economy. The early centralised Stalinist "command economy" had worked to industrialise the USSR rapidly on the eve of World War II and to restore the devastated economy after the Nazi invasion and occupation. But the investment in heavy industry and the creation of large, inefficient collective farms did not allow for the provision of abundant goods and food supplies or adequate housing for the working population. The elite lived a privileged life, with special shops in which to buy what they needed, but workers and peasants lived poorly and lost much incentive to produce. A series of economic reforms – the permitting of greater initiative for peasants in agriculture, the "Virgin Lands", program in Kazakhstan to open up new farms, the creation of regional economic councils (sovnarkhozy) in 1957 – was launched to revitalise the economy without giving up party control over the levers of economic power. For Armenia the experiments meant more local initiative, though ultimate planning and budgetary control remained in Moscow. Industrial enterprises in the public were placed under the local Ministry of Industry and local farming under the local Ministry of Agriculture. The huge collective farms of the late Stalin period were broken up into smaller farms, still collectivised but more manageable. The poorly educated farm chairmen were now to be better trained. Whereas in May 1950 Armenia had been ordered to supply its own grain, the new policy allowed the republic to specialise in crops that better suited its terrain. Besides grain, which still made up 40 percent of sown acreage, Armenians planted wine grapes, fruits, vegetables, and tobacco in greater amounts. Livestock production expanded, and agricultural productivity per unit of cultivated land rose. Between 1950 and 1978 agricultural output increased by 218 percent. Though farm incomes improved in Armenia, the republic remained close to the bottom of any union republic in per capita farm income.
The shift from farm to factory, village to town, continued through the 1950s, 1960s, and 1970s. In the Soviet Union as a whole, the percentage of the labour force working in agriculture and forestry dropped from 46 percent in 1950 to 39 percent in 1960 and 22 percent in 1975. The Armenians started below the Soviet average in 1950. Fifty percent of Armenian labour worked in agriculture and forestry in the last years of Stalin, but that figure rapidly dropped to 35 percent in 1960 and to 20 percent in 1975. As for industry, Armenian workers made up only 24 percent of the labour force in 1950 and grew to 32 percent in 1960 and to 38 percent in 1975, thus reaching the all-USSR level and surpassing the levels of Azerbaijan (28 percent) and Georgia (27 percent). Armenian peasants, who had made up over 80 percent of the republic's population in 1920, were only 20 percent by the end of 1970s. Only a third of Armenians continued to live in the countryside in the early 1980s, while two-thirds lived in towns and cities. After sixty years of Soviet-style modernisation, Armenia had become a predominantly urban and industrial society.
The post-Stalin decades were marked by rapid industrial growth in Armenia. From 1950 to 1978 Armenian industrial output rose at an average annual rate of 9.9 percent, exceeding the rates of Georgia (8.2 percent) and Azerbaijan (7.4 percent) as well as that of the USSR as a whole. However, on a per capita basis Armenia (and Georgia and Azerbaijan as well) grew slower industrially than the USSR average. Nevertheless, from a minuscule industry based almost entirely on copper mining and cognac distilling, Armenia has developed an advanced machinery industry with a highly skilled labour force. Forty percent of industrial workers in Armenia were in the machine industries, building electrical equipment, motors, and machine tools. By 1978 Armenian industrial production was 335 times greater than it had been in 1913. Though poorer by most indices than the Soviet Union in general, Armenia was significantly better of materially than its Muslim neighbours, Turkey and Persia, and had obviously benefited economically from its association with the rest of the Soviet Union.
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