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Executive Summary

Armenia has a long tradition of excellence in science, technology, and education. During the Soviet era, Armenian capabilities were oriented to a significant degree toward supporting the Soviet military-industrial complex. Research activities, particularly in physics, were well financed. Education in science and engineering received strong support. A number of industrial facilities operated throughout the country, providing goods for local consumption and for more distant markets within the Soviet Union.

With the disintegration of the Soviet Union, Armenia became isolated from many of its markets, and exports rapidly declined. As the economy spiraled downward, the budgets for research and education plummeted. A major exodus of technical talent began. Although many research and education institutions and a few industrial facilities remain, their capabilities have eroded considerably. Many laboratories and much equipment are obsolete, with little hope of replacement. Funds to cover costs of experimental work are scarce, and the funds that are available are not always directed to activities with high potential to build research capacity and lead to economic development. Paying customers for the results of research products are few in number. While educational standards remain high, the infrastructure supporting students continues to decline, and the “brain drain” has resulted in a serious deficiency of practicing scientists in the 25 to 40 age bracket.

Nevertheless, Armenian scientists who remained have persevered and have achieved impressive results despite severe financial limitations. Now more than ever, science and technology (S&T) are critically important to the future of Armenia. With few export sectors remaining from the Soviet era beyond foodstuffs, alcoholic beverages, and precious and non-precious stones, Armenia’s



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Science and Technology in Armenia: Toward A Knowledge-Based Economy Executive Summary Armenia has a long tradition of excellence in science, technology, and education. During the Soviet era, Armenian capabilities were oriented to a significant degree toward supporting the Soviet military-industrial complex. Research activities, particularly in physics, were well financed. Education in science and engineering received strong support. A number of industrial facilities operated throughout the country, providing goods for local consumption and for more distant markets within the Soviet Union. With the disintegration of the Soviet Union, Armenia became isolated from many of its markets, and exports rapidly declined. As the economy spiraled downward, the budgets for research and education plummeted. A major exodus of technical talent began. Although many research and education institutions and a few industrial facilities remain, their capabilities have eroded considerably. Many laboratories and much equipment are obsolete, with little hope of replacement. Funds to cover costs of experimental work are scarce, and the funds that are available are not always directed to activities with high potential to build research capacity and lead to economic development. Paying customers for the results of research products are few in number. While educational standards remain high, the infrastructure supporting students continues to decline, and the “brain drain” has resulted in a serious deficiency of practicing scientists in the 25 to 40 age bracket. Nevertheless, Armenian scientists who remained have persevered and have achieved impressive results despite severe financial limitations. Now more than ever, science and technology (S&T) are critically important to the future of Armenia. With few export sectors remaining from the Soviet era beyond foodstuffs, alcoholic beverages, and precious and non-precious stones, Armenia’s

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Science and Technology in Armenia: Toward A Knowledge-Based Economy scientific manpower has become one of the country’s strongest assets. From the scientific, economic, and political points of view, this asset should be nurtured and promoted to the fullest extent possible. For the past decade, the international community has recognized Armenia’s technical wherewithal and has provided substantial financial support for its maintenance, although the support is far from adequate to meet the demand. The International Science and Technology Center headquartered in Moscow has become the most important external source of funds for research, and the U.S. Civilian Research and Development Foundation also plays a significant role in supporting research, both directly and through the National Foundation of Science and Advanced Technologies (NFSAT). Various projects supported by the World Bank, the European Bank for Reconstruction and Development, and bilateral assistance programs of a number of donors also have technology dimensions. As is well known, remittances from Armenians living abroad are important in financing small activities (e.g., tuition for university students), and their donations occasionally support large projects (e.g., road construction). However, in the aggregate, programs supported by more than 20 donors, together with programs of the Armenian government, are barely able to meet the subsistence-level payrolls of the science and engineering workforce. There are few funds for new activities that could eventually generate their own financial resources. For Armenia to realize its science and technology potential, the following suggestions are offered: Strong Armenian government leadership is needed, including a long-term budgetary commitment, for upgrading the S&T base. While the Armenian government has set a reasonable target of devoting 3 percent of the total national budget to S&T, actual funding has been only about one-third of that level. This low level of support by the government has led to excessive dependence on foreign sources of funding for maintaining the nation’s S&T capacity. Insistence by foreign funders on cost sharing by the Armenian government should be considered as a means of encouraging it to fulfill its budget commitments. A government mechanism should be established and funded to jump-start small entrepreneurs interested in developing promising innovative ideas with good market potential. U.S. experience with Small Business Innovation Research programs, which are operated by a number of federal departments and agencies to provide grants to stimulate technological innovation in the private sector, might be helpful in this regard. The appropriate funding level for this program could reach $10 million annually if the initial results are positive. A limited number of centers of excellence should be established through a competitive process to serve as focal points for research and for science services, with financial support from both Armenian and international sources. The cost of this program should reach a level of $10 million annually within several years.

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Science and Technology in Armenia: Toward A Knowledge-Based Economy NFSAT is a model institution for the support of peer-reviewed research funding in Armenia and deserves a severalfold increase in its funding. Funding for new S&T programs such as those recommended in this report should be administered through NFSAT or organizations with comparable peer review processes. Armenian institutions of higher education should continue to modernize their structures and curricula and should make strong efforts to recruit young, foreign-educated faculty. A sustained program of visiting professorships would provide a useful mechanism for distinguished foreign faculty who could not only enrich curricular content but also contribute ideas on university organizational and administrative practices. In addition, selected laboratories for use by faculty and students in the universities should be upgraded. CANDLE (Center for the Advancement of Natural Discoveries using Light Emission) is an ambitious attempt to create a state-of-the art, next-generation facility with applications in a wide range of fields, from basic physics, chemistry, and biology to applied research in drug design, medical diagnostics, and environmental remediation. It should be supported through the next pre-construction phase of detailed engineering design and of testing the concept of manufacturing equipment in Armenia. This phase will require funding of up to $4 million over a two-year period. Efforts should be launched to improve the overall intellectual property rights system in Armenia, with particular attention to promoting better understanding among potential inventors of the importance of protecting intellectual property rights and of the procedures to obtain such protection. The intellectual property rights program of the International Science and Technology Center should be extended to serve Armenian institutes. There have been a few successes in recent years. Private entrepreneurs in the information technology sector have developed an industry with annual export sales reported at $50 million. Also on the international scene, the Byurakan Observatory remains an important facility for optical astronomy. Modernization of the agricultural sector is leading to increased exports to countries of the former Soviet Union. Foreign students are paying substantial tuition to study at Armenian universities. Medical services are being offered to patients from nearby states as well as to Armenians. Small specialty companies are beginning to find niches in high-technology markets such as the production of fuel cells and the design and manufacture of circuit board components. Areas that seem to offer promise for further development include the following: Information technology, and particularly software development Semiconductors Infrared detectors Large single crystals

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Science and Technology in Armenia: Toward A Knowledge-Based Economy Laser technology and light detection and ranging (LIDAR) systems Precision electromechanical instruments Analytical services for the pharmaceutical, food, and chemical industries using advanced systems such as nuclear magnetic resonance Specialty chemicals Specialty materials Specialty agricultural products and processing Nutraceuticals and functional foods Genetic testing and other clinical laboratory services Human clinical trials Regional health centers Geological consulting Earthquake engineering Mineral refining But in all of these areas, successful economic development based on S&T will require more than merely identifying research and technologies that seem to have economic potential in more mature market economies. It will require building the value chains that have the capacity to finance, develop, and market those promising technologies in a manner that returns value to the Armenian economy. The handful of successes to date and the long menu of areas of potential interest for the future are encouraging, as is the resourcefulness of Armenian scientists in establishing and maintaining linkages with the international scientific community despite enormous challenges. Yet there will continue to be great difficulty in developing an internationally competitive S&T base and commercially viable innovative businesses. Limited research funds are currently spread over too many institutes and too many programs, and those activities that are not making significant contributions to science or economic development should be abandoned. At the same time, steps must be taken to provide more opportunities for young scientists and engineers to assume responsible positions with adequate compensation within the universities and research institutes that command international respect. With reasonable funding and more focused and determined efforts in the areas highlighted in this report, Armenia should be able to move forward toward a viable knowledge-based economy.1 1   A knowledge-based economy is defined by the Organization for Economic Cooperation and Development as an economy that is “directly based on the production, distribution, and use of knowledge and information” (see The Knowledge-Based Economy, Organization for Economic Cooperation and Development, 1996, posted at http://www.oecd.org/dataoecd/51/8/1913021.pdf).