Celebrations on the streets of Yerevan after the declaration of independence (Sept. 21, 1991)

Author’s Note: The first two installments of this series focused on the need to establish a culture of personal and societal responsibility and accountability and the need for a doctrine of national security, based on the principle of absolute inviolability of the integrity of the Armenian nation and the readiness to exact the most severe of punishments on those willing to test the resolve of the nation.

The former is needed to demonstrate to our citizens that all must be accountable and all must participate in upholding the laws of the land. A fundamental problem in Armenia is the complete lack of any respect for the rule of law, partially due to formulation of laws not for the benefit of the citizens, and partially out of convenience and personal gain. The latter is not motivated by a lust for blood, but for the basic need to ensure sovereignty and to secure a place for the nation on the table to deal and negotiate with regional and world powers. Armenia happens to be located at a strategic location. Exercising the nation’s sovereignty to the fullest will allow Armenia to participate in the processes shaping the future of the nation and that of the region. If we are not at the table, then we surely are on the menu, a predicament made abundantly clear by the actions of the current regime. 

Part 3 will shift focus to education, as another pillar of building a strong and thriving nation, to raise generations of well-educated, knowledgeable and articulate citizenry capable of critical and independent thinking, able and ready to respond to the unforeseen challenges of the future. Such citizenry will be well aware of its history, culture, national ethos and values, in addition to formal education. The current reality of Armenia provides anything but, where an outdated and mediocre system perpetuates mediocre citizenry. Arnold Toynbee astutely observed that “Civilizations die from suicide, not by murder.” Our willful destruction of our institutions, our willful ignorance for the rule of law and our willful shirking of personal and societal responsibilities are pointing us to pull the trigger.

Most Armenians, both on Armenian soil and in the Diaspora, have been engaged and/or continue to engage in efforts within their capabilities to support the nation. However, we know that these disparate efforts, as well-intentioned and as well-conducted as they might be, cannot lead to the systemic shift needed to address Armenia’s underlying problems. To do so, a hard reboot is essential. Armenia and Artsakh have a significantly homogeneous population, with other small ethnic populations who have shown their valor in defending Armenia. This is both an asset, as it reduces the chances of internal strife, and a challenge, as it reduces diversity. They also have a significant Diaspora, a great yet severely underutilized and misunderstood asset. These sum up the hard resources of the Armenian nation. Therefore, her future depends on harnessing the innovative spirit of these assets for a brighter path ahead. Each one of us can and must play a role in the tapestry of our nation. The key is to frame the vision, develop a robust plan to implement the vision, and use existing resources as much as possible towards achieving the vision. This includes using our single most important asset, our people in Armenia and abroad (the Armenian nation) as skillfully and as efficiently as possible. 

In 1945, Dr. Vannevar Bush, the scientific advisor to President Roosevelt, authored a report titled “Science – the Endless Frontier” in response to President Roosevelt’s question on how science and technology could best be applied to benefit the nation’s health, economic prosperity and national security in the decades that would follow WWII. Seventy-five years later, the Armenian nation must answer the same question. Significant investments and well-thought-out plans are called to usher in an era of science, technology, engineering, art and mathematics (STEAM). This will educate and engage our brightest minds, to develop technological, biomedical and artistic breakthroughs and expressions, to propel Armenia’s economic and military might and its standing in the world. Previous success stories abound, be they Singapore, South Korea, Israel, Estonia, Finland or Ireland, all with different opportunities and threats, national characters and regional and international constraints and advantages than Armenia, but all unified in the desire to turn a new page in their history. Some were led by strongmen and others were not. 

To forge ahead, we need to better understand the existing foundations to build upon. There is a strong history of higher education and extremely high rate of literacy in Armenia as one of the positive effects of the Soviet era. Unfortunately, this has significantly diminished in recent years, to a point that literacy is not guaranteed among our graduates. This year, we appear to have thousands of unfilled college spots, undoubtedly spurred by the realities of the past two years. There are a number of public and private institutes of higher education and national academies devoted to science, with the Yerevan Physics Institute as the crown jewel of the Armenian scientific prowess of the yesteryears. Unfortunately, the last 30 years have not been kind to Armenia’s higher education institutions. Government funding has been insufficient, allocating 0.36 percent of the GDP to higher education and less than one percent to science, well below international benchmarks. On average, Armenia spends $1,000 per pupil for primary and secondary education, whereas international benchmarks are in the $10,000 to $15,000 range. In general, Armenia lags in education spending by 40 percent or so, when compared to the other countries in the region and countries with similar income. Similarly, Armenia allocates $2,600 per student in its top nine ranked institutes of higher learning (seven public and two private institutions with external sources of funding and significantly larger expenditure per student from the Diaspora and Russia). This number drops to $1,500 per student for the top seven public institutions.

Figure 5

To put this in perspective, Figure 5 presents higher education expenditure (USD) per student for universities ranking from 1-10, 11-100, 101-1000, and 1001-2000 respectively. While the key point is to transform and consolidate the higher education system in the nation, these funding indicators show how our universities compare against international peers and how far they are lagging. In world university rankings, an Armenian institution appears first at 2,531 (Yerevan State University), followed by the American University of Armenia (3,923), Russian Armenian State University (4,738), Yerevan State Medical University (5,724) and Armenian State University of Economy (7,316), rounding out the top 10,000 list. Astonishingly, the National Polytechnic University of Armenia is ranked at 12,840. Clearly, if we are to build an innovation-based economy, these institutions in their current shape will not be the ones leading us to innovation and economic prosperity. Again, all rankings have their biases and flaws, but they provide a comparable snapshot worldwide. Only one ranking system (webometrics) covered institutions of higher learning past the 2,000 mark. The other ranking systems (US News, Times Higher education, QS and Center for World University Rankings) only go as far as the highest 2,000 institutions. We can also compare the ranking of our top nine universities with those of our neighboring nations, including our enemies (Table 1), ranging from 211 to 10,886. The first appearance of an Armenian institute of higher learning among our neighbors is at number 32.

Table 1

There is no arguing that most of our institutions are mediocre at best. But, this is not exclusive to institutions of higher learning, as it applies to most other public and private institutions in the country, with a few notable exceptions. We, as a nation, have adopted the mantra of mediocracy. Lack of resources, lack of highly trained individuals, lack of systems level thinking and implementation, ease and indifference, and most notably lack of vision all contribute to this unfortunate state. Armenian political elite frequently confuse vision with empty grandstanding. This must stop. The academic curricula are not up to date; neither are the faculty and the facilities meant to nurture the next generation of leaders and builders of the economy. A review of the departments and divisions of the State Engineering University of Armenia (the Polytechnic) reveals that a whopping 77-percent of the department/division heads graduated from the same institution (mostly in the 70s). This is the very definition of academic incest. The archaic names of these divisions further betrays their disconnect with the state of the art in technology. And in the rare cases where resources are available, they are underused and underappreciated by out of touch faculty. Even in the IT sector where we have achieved economic success, we lag behind in innovation and development of future technologies. We lack a strong secondary education in this domain, because it does not pay to be a computer and electrical engineering or computer science faculty in the nation. One can make a better living being an iOS or Android developer individually, but as a nation we miss out on contributing to the development of the next technological wave of innovation. This is the key multiplier of our economy and not another app development house.

Webometrics has ranked 31 additional Armenian institutions of higher learning, ranking from 13,752 to 29,298, a mixed bag of public and private institutions, which are little more than degree mills. One could argue, why would a nation of less than three million inhabitants need 40 universities? The answer is, it doesn’t. Let’s compare Armenia with Switzerland (admittedly an extremely unfair comparison). Switzerland has a population of 8.5 million with two federal technical universities – the only two in the nation (ranked six and 14 worldwide by QS), and 10 cantonal (state) universities, ranking from 69 to 650 worldwide. A more favorable comparison is with institutions of higher learning in Lithuania, an ex-Soviet nation with a population of 2.8 million. University of Vilnius appears at number 423, Vilnius Gediminas Technical University at 696 and Kaunas Technical University in the 801 to 1,000 range. Lithuania has gained a foothold in the auto industry, with Continental AG building a factory for high-precision car electronics (the biggest greenfield investment project in Lithuania so far) and Hella opening a plant to produce sensors, actuators and control modules for the automotive industry. These automotive companies are relatively small, but their size allows them to be nimble for small and non-standard orders at competitive prices. Vilnius Gediminas Technical University prepares the manpower for this sector. In fact, Lithuania is among the top five countries in the world by tertiary education attainment, with 55-percent of the population aged 25 to 34, and 31-percent of the population aged 55 to 64 having completed tertiary education. Their share of tertiary-educated 25 to 64-year-olds in STEM fields are above the OECD average. It is not coincidental that Lithuania’s nominal GDP per capita is $19,601, whereas Armenia’s is $4,622. Another fair comparison is with Estonia, another ex-Soviet state with a population of 1.32 million. Its University of Tartu ranks at number 285, Tallin University of Technology (TalTech) at 676, and Tallin University in the 801 to 1,000 range. Estonia enjoys an incredible nominal GDP per capita of $22,986. It boasts a strong IT sector, thanks to its heavy investment in the Tiigrihüpe project in the 90s, while we were busy with pilfering. Estonia’s PPP GDP per capita is a whopping $37,033. One could only imagine the quality of life of Armenian citizens at such GDP levels. Understandably, Lithuania and Estonia have Scandinavians as neighbors and not uncivilized barbarians like Azerbaijan and Turkey. Additionally, Lithuania and Estonia neither suffered a devastating earthquake in the waning hours of the Soviet Union nor were thrust into a bloody war to save their kin and face closed borders on two sides. Nonetheless, in the early post-Soviet years, they made a conscious decision to move toward inclusive political and economic institutions, adopt and encourage a strong work ethic, value competence and invest in education and consolidate institutions of higher learning. The results speak for themselves.

Figure 6 presents the GDP growth of Armenia, along with those of Estonia, Lithuania, Latvia, Croatia and Slovenia, all post-Soviet or previous eastern bloc countries who have performed significantly better than Armenia.

Figure 6

Figure 7 shows the nominal GDP per capita of Armenia along with those of 10 immediately higher and lower ranked countries, hardly a company of powerhouses. If Armenian citizens would like to enjoy the lifestyle of Estonian citizens, they need to increase their per capita GDP 5.13 times. Given that education and innovation must be the driving forces of the country’s economic engine, Armenia must allocate at least one-percent to 1.33 percent of its projected nominal per capita GDP (that of Estonia) toward education and science ($615 million to $818 million USD), as opposed to the paltry 0.33 percent of the current nominal GDP that is spent on education and science in Armenia (public/private sector partnership is also of essence here). Additionally, the projected increase in this GDP will expand the country’s purchasing power to match its enemy, Azerbaijan, with its three-fold higher population. This parity is essential to prevent the reoccurrence of the disastrous outcomes of the 2020 war. While Azerbaijan enjoys a 40+ billion dollar sovereign wealth fund, it is run by the Aliyev clan as their personal fiefdom and enjoys the last decade or so of its oil revenues with little else to fall back on, where 95-percent of their industry revolves around hydrocarbons. The vision of the current regime is in opening borders in hopes of selling goods with neighbors to increase trade. What goods are to be sold and based on what innovation remains to be seen.

Figure 7

According to the World Economic Forum, the following countries have the best education systems in the world: 9-Japan, Barbados and New Zealand; 8-Estonia; 6-Ireland and Qatar; 5- the Netherlands; 4-Singapore; 2-Belgium and Switzerland; and 1-Finland. The predominant features of these countries are the presence of inclusive political and economic institutions, competence, strong work ethic and value systems. Not surprisingly, Estonia appears eighth on this list, spending a high percentage of its GDP on education. Estonia’s 1992 Education Act says that the goals of education are “to create favorable conditions for the development of personality, family and the Estonian nation; to promote the development of ethnic minorities, economic, political and cultural life in Estonia and the preservation of nature in the global economic and cultural context; to teach the values of citizenship; and to set up the prerequisites for creating a tradition of lifelong learning nationwide.” These values are far from paying bribes to obtain an unearned degree or to place an unqualified student in an unearned university or major, simply because he or she is the son/daughter of an oligarch, merit be damned. Estonians dared to establish a plan to develop the Estonian citizen, family and nation. How dare they pursue such blatantly nationalistic policies?

Another example is the Finnish system, where many lessons have been learned from its focus on developing an innovation-based economy as presented in a 2006 World Bank Institute report. “The first lesson is that it is possible for a country to make a dramatic recovery in the level of GDP and at the same time, undertake a major restructuring, as Finland did. An important corollary is that a crisis can be turned into an opportunity. However, for this to happen, there may need to be certain preconditions as well as great flexibility in the economy. A second lesson is that globalization is a double-edged sword and a demanding taskmaster. Finland has become the leading ICT technology, because it has adopted the global ICT industry and produced for the global market. On the other hand, Finland is also struggling with the impact of globalization, which is putting pressure on it to improve its technology and education systems to stay competitive in a very demanding global environment. The third lesson is the importance of flexibility or elasticity of the economy to react to changing opportunities, and the importance of a responsive education sector to facilitate this. It is perhaps the educational system that has played the most critical role. Finland already had a high level of educational attainment, which previously facilitated the necessary restructuring of the economy. In addition, the educational system was able to respond very quickly and flexibly to the new opportunities. The Finnish experience also has several implications for developing countries. The first implication is the continued importance of the basic elements of the Washington Consensus. These elements are essential to give the economies the flexibility they need to constantly redeploy assets to their most productive uses. The second implication is the imperative to develop vision and consensus-making mechanisms. Reforms involve changing the status quo, and doing so usually does not happen unless there are major external or domestic forces advocating for such changes. The third implication is the importance of developing appropriate knowledge strategies. Finland had to increase higher educational attainment in general, and scientific and technical skills in particular. These challenges involved not only increasing R&D expenditure but also focusing on getting the fruits of R&D into the market. Finland’s strong emphasis on the systemic approach to innovation evolved, including bridging the entrepreneurship and financing gaps to turn invention into commercial application. These strategies have to be adjusted to the specifics of each country. For the majority of developing countries the focus needs to be somewhat different than Finland’s. Because, in virtually all sectors, developing countries are still very far from the technological frontier, they still need to put priority on developing effective means of tapping the preexisting and rapidly growing stock of global knowledge. A final implication for all countries is the importance of focusing not only on what can be learned from the past (their own and other countries’ experience) but on anticipating and preparing for the future. This is one of the key lessons of the Finnish example and explains to some extent why Finland not only was able to make such a dramatic transformation to a knowledge-based economy, but also why it has been able to remain so competitive.

Primary/Secondary Education

Armenia must reform the system to absorb at least $10,000 per pupil toward this level. With approximately 20-percent of the population in the five to 19 years age range, this translates into $592 million USD. As funds alone will not solve the problem, Armenia desperately needs world-class expertise and trained individuals to engage in systems level thinking to devise appropriate educational platforms, using best practices worldwide, optimize them to local and cultural needs and implement them. Unfortunately, the significant professional resources of the Diaspora have not been fully engaged in any meaningful manner during the past 30 years. Despite its depth of expertise, it is quite possible that even Diasporan resources might not have systems level expertise to help develop a state-of-the-art primary and secondary education system. However, there will be significant resources that can assist in gathering the right thought leaders, planning, training and implementation components for such plans. Therefore, it is essential to engage diasporan experts in education with select experts from Armenia to form an internationally recognized advisory board to assess the existing system, evaluate best practices worldwide and offer a working plan to reinvigorate the primary and secondary education system, with concomitant education on good citizenship, a focus on national values and history and a moral compass rooted in honesty, justice, work ethic, civic and personal responsibility and accountability. A meritocratic system revolving around rewarding the best teachers to train the best pupils must be the driving force. Anything less must be considered as dereliction of duty and treason. The lottery system can be leveraged as a source of revenue for the education system, converging the monetary gains of a vice into funding a national virtue.