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The Armenian Scientific Sector Receives a Boost

With an eye toward attracting foreign investment, the Armenian government is trying to update and overhaul Armenia's scientific sector for the first time since the collapse of the Soviet Union.

During the Soviet era, Armenia was known for its scientific edge – aside from academic pursuits, the country excelled in applied uses of physics, chemistry and materials sciences. As in other former Soviet republics, though, the end of Kremlin subsidies for research institutes involved in the development of technologies for the Soviet military left many scientific professionals without work, prompting a brain drain that still continues. Those scientists left behind continue to work under difficult conditions, with almost no funding for scientific projects and salaries barely over the minimum of $40-$50 per month. Scientific research and development accounts for less than 1 percent of Armenia's Gross Domestic Product.

The government is now trying to correct that situation. In May 2006, the Armenian parliament adopted a law for the state support of so-called "innovative activities." Four months later, the government adopted a five-year program outlining specific measures to encourage scientific innovation.

"This program is the first serious attempt by the Armenian government to show that Armenian scientific products are interesting to investors," commented Ashot Khandanian, head of the Science, Technology and Investment Policy Department at the Ministry of Trade and Economic Development. Both the United Nations Industrial Development Organization and the United Nations Development Programme have pledged their financial and technical support for the government's plans.

Under the program, an analytical center, housed in an existing scientific institute, will evaluate promising scientific projects and developments and then promote the findings with outside investors. In a complementary move, the government intends in 2007 to adopt legislation to establish venture capital funds that would use both state and private monies to encourage development of privately run scientific projects.

The lack of such financing has already tripped up some scientific institutes from securing foreign investment. In one such institute, according to Khandanian, a proposal from a leading European consulting firm for mass production of nano-batteries with highly improved parameters fell flat after the institute failed to secure the $15,000 needed to produce a trial run of the batteries for testing and certification. No legal basis existed for the government itself, in the absence of private funds, to back the project, Khandanian said.

Meanwhile, a draft proposal on restructuring academic scientific research was released in October 2006 for public discussion; reforms are expected to start in 2007 once a final policy paper is adopted. As an initial step, the monthly salary of scientific workers in state-run institutes, which averages about 22,000 drams, or $60 (the national average is 60,000 drams or $140), will be doubled in 2007.

The private sector is also getting involved in developing Armenia's research potential. The privately funded National Foundation of Science and Advanced Technologies (NFSAT), together with a team of business consultants, recently sent out promotional materials on 16 peer-reviewed scientific proposals to potential investors worldwide. The Washington-based Civilian Research and Development Fund -- an NFSAT partner that tries to reverse the outflow of scientific specialists from former Soviet republics -- provided $36,000 for the initiative.

The program has already had one success. Plans are now underway for a joint venture between an Armenian researchers' group and an American firm interested in a vibration detector developed at Yerevan State University that can be used in seismic devices.

"These successes are important not only by themselves, but also as evidence that Armenia is still a country with a scientific sector which is interesting for investors," commented NFSAT Chairman Haroutiun Karapatian. "The problem is that many people, both in Armenia and abroad, do not believe this. Skepticism is still high about the potential of Armenian science and its ability to create viable products."

The government's Khandanian shared NFSAT's optimism. Having one successful proposal out of the 48 received by NFSAT is not a bad result for a country like Armenia, he said. "With start-up businesses, three, four or five successful results out of a hundred are considered normal," he said.

Whether similar results can be obtained elsewhere remains to be seen, but the government maintains that Armenia has the wherewithal for other joint ventures as well. More than a dozen Armenian institutes of applied science continue to work successfully and regularly cooperate with colleagues in Europe, the United States and China, stated Khandanian.

Haroutiun Khachatrian is a Yerevan-based writer specializing in economic and political affairs.

The Armenian Scientific Sector Receives a Boost

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