1. SCIENCE, TECHNOLOGY AND INNOVATION POLICY REFORMATION TRENDS IN TRANSITION COUNTRIES ON THE MODEL OF ARMENIA Tigran ARZUMANYAN 2nd PhD School on Innovation and Economic Development: Globelics Academy 2005, Lisbon, Portugal 23 May – 4 June, 2005

2. A LITTLE HISTORY... During the Soviet period Armenia developed a ramified and actively operating system of research and technological institutions. These capabilities were oriented to a significant degree toward supporting the Soviet military-industrial complex and most of research institutions were well financed directly from Moscow.

3. After the collapse of the USSR... The difficulties of a transition period, worsening of the economic situation, destruction of previous economic, scientific and other connections, sharp decrease of a demand for a traditional Armenian production (including intellectual) have unavoidably led to the sufficient reduction in the activities of many scientific and technical subdivisions and relevant S&T capacious productions/industries.

4. PROBLEMS FACED  reduced budget allocations to R&D, mainly used for salaries and covering growing operating costs;  sharp reduction of total number of research staff and slowdown of inflow of young specialists to science and technology resulting in deficiency of practicing scientists in the 25- 40 age bracket;  emigration of qualified Armenian specialists to the developed foreign countries or other sectors of the economy.

5. DYNAMICS OF GERD/GDP % (1990-2002) Source: National Statistical Service of Armenia, 2003. Statistical Yearbook of Armenia, www.armstat.am

6. FINANCIAL ALLOCATIONS TO R&D Gross Domestic Expenditure on R&D (GERD) was 0,2 % of GDP in 2002 In 2002 GDP was around 50% of GDP 1990 in nominal values; Governmental funds according to type of activity: –about 70% to basic research –about 27% to applied research –about 3% to experimental developments

7. Source: National Statistical Service of Armenia, 2004. Statistical Yearbook of Armenia, www.armstat.am NUMBER OF R&D INSTITUTIONS (1991-2003)

8. NUMBER OF RESEARCH PERSONNEL (1997-2003) Source: National Statistical Service of Armenia, 2004. Statistical Yearbook of Armenia, www.armstat.am

9. S&T INFRASTRUCTURE Parliamentary Commission for Science Department of Science Ministry of Education and Science Presidium of National Academy of Sciences Science Departments of Relevant Branch Ministries R&D Institutes University R&D Subordinated R&D Institutes Source: Compiled by the author

10. MAIN R&D INSTITUTIONS OF ARMENIA NATIONAL ACADEMY OF SCIENCES - Total number of Institutes - 40 Including: Division of Physical, Mathematical & Technical Sciences - 13 Institutes, in the fields of ICT, Physics, Nuclear Physics, Astrophysics, Radiophysics &Electronics, Geophysics, Engineering Seismology, Mechanics, Mathematics, Geological Sciences, etc.

11. NATIONAL ACADEMY OF SCIENCES (2) Division of Natural Sciences - 16 Institutes, in the fields of: Biotechnology, Medical Genetics, Environmental Studies, Neurochemistry, Chemical Physics; Fine Organic, General and Inorganic Chemistry, Microbiology, Physiology, Ichthyology, Zoology, Physiology, Hydroponics, Botany, etc.

12. NATIONAL ACADEMY OF SCIENCES (3) Division of Humanities and Social Sciences - 11 Institutes, in the fields of: Archaeology, Ethnography, Oriental Studies, Philosophy, Sociology, Law, Economics, History, Armenian Studies, Art History, Linguistics, etc.

13. MINISTRY OF EDUCATION AND SCIENCE 20 national universities supervised by the Ministry of Education & Science including: Yerevan State University, Medical University, Engineering University, Agricultural Academy, etc. About 70 private universities established during last years

14. OTHER BRANCH R&D INSTITUTIONS Ministry of Trade & Economic Development About 40 institutes (Yerevan Physics Institute, Institute of Biotechnology, Institute of Optic- physical Measurement, Institute of Applied Chemistry, etc.) Ministry of Health Care 10 institutes involved in various medical research Ministry of Agriculture 6 institutes

15. RESPONSIBILITIES OF EXECUTIVE BODIES MINISTRY OF EDUCATION & SCIENCE Responsible for general S&T policy making in the country Management of Universities’ R&D Institutional & project based distribution of budget funding to all R&D institutions based on the decision of Expert Commissions (Peer review)

16. MEMBERS OF EXPERT COMMISSIONS Experts from each R&D Institution & University Scientific Councils of R&D Institutes and Universities elect experts Problems Impartiality of decision-making is questionable (conflict of interests) Need for involvement of independent experts

17. NATIONAL ACADEMY OF SCIENCES The Law assigns the Academy to: Manage R&D Institutes of NAS RA Coordinate basic research carried out throughout Armenia Act as official scientific consultant to the highest governing bodies of the country, proposals of which in the field of S&T are to be necessarily taken into discussion.

18. RECENT DEVELOPMENTS IN S&T&I During last years Armenian Government initiated steps to improve the situation and declared S&T and Innovation Policy as priority area for development. Law on Scientific & Technological Activity adopted in 2000 to regulate interrelations between research & technological organizations, state bodies and consumers of research outcomes. It states the need for promoting innovation and commercialization of research outcomes as main factor of economic growth.

19. RECENT DEVELOPMENTS IN S&T (2) In 2002 the Government also specified main scientific directions as priority areas for development as follows: –Armenian Studies; –Information Technologies –Basic research promoting applied research of vital importance –Advanced Technologies (Biotechnology & Nanotechnology) –New Energy Sources and New Materials –Risk Factors & Human Health

20. PROBLEMS Absence of S&T&I coordinating body at the highest governmental level; Status of the academic institutes as non-commercial organizations as restricting factor to commercialization of R&D results; The measures undertaken are mostly of declarative character and don’t provide real mechanisms for achieving the stated objectives; Declared priority areas are very general and hardly to be developed all together by scarce funds allocated for R&D.

21. RECENT DEVELOPMENTS IN S&T (4) Along with stated problems certain positive trends can be observed: According to officials, growth in IT sales has been nearly 20% per year during last years, accounting for 2% of the GDP (about $ 50 million USD in export revenues in 2003). Around 200 small private software companies have emerged in recent years, working primarily through outsourcing contracts with large Western software firms.

22. SUCCESS STORIES Enterprise Incubator Foundation founded in 2002 to assist: Building successful business incubation mechanisms for IT start-ups. Stimulate growth in IT sector by providing interrelated services; Drive Armenian technology products to international market; Attract foreign investments.

23. SUCCESS STORIES (2) Open Source Armenia, initiated in 2003 The project in Armenia in the IT area aimed at developing a community of IT professionals and exposing their potential to the world. Provide organizational, legal, technical, management, marketing and financial support for the OSA open-source software projects. Encourage development of hi-tech enterprises in the country.

24. SUCCESS STORIES (3) Viasphere Technopark State-of-the-art technology park located in Yerevan providing infrastructure to local startups and ICT companies worldwide looking to extend their core development offshore; Currently houses several US-based subsidiaries developing advanced technologies in variety of ICT fields.

25. CONCLUSIONS To ensure further development of S&T and Innovation processes in Armenia urgent reformation of the whole system is needed. Establishment of coordinating body (Council on S&T&I ) to develop system reformation recommendations and carry out enforcement; Creation of special state programmes directed to promoting academy-university-industry cooperation;

26. CONCLUSIONS (2) With presently available resources it seems to be very difficult for Armenia to sustain its robust and huge R&D infrastructure, particularly, in the field of basic research with sometimes overlapping research activities. This necessitates some realignment of the overall governmental research structure with the concentration of available resources for establishment of a few centers of excellence in the declared priority areas.

27. Armenia is a small country but it has a striking landscape and it contains some awesome vistas

34. MATENADARANMATENADARAN

35. NORAVANQ MONASTRY -XII-XIV AD

36. Yerevan by night

37. THANK YOU! Tigran Arzumanyan Foreign Relations Department, National Academy of Sciences of Armenia Institute of Philosophy, Sociology and Law E-mail:tarznip@sci.am