Since its independence, Armenia has been one of the fastest-growing economies among the countries in Eastern Europe and South Caucasus (EESC) with GDP growth averaging 6 percent during the last two decades. Fueled by substantial reforms and increased foreign investment, the country embarked on a path of overall economic rise and improved quality of life.
This growth, however, has been volatile as it remains vulnerable to external shocks, most recently COVID-19, which has caused an economic decline of 7.6 per cent in 2020, exacerbating several structural challenges. These include the need to upgrade infrastructure, diversify exports and investments, address skills gaps in the labour market, and improve the legal framework.
To address these challenges and build a more sustainable foundation for long-term growth, encouraging innovation, namely trying out new ideas and processes and scaling up what works and creates value, should be central to Armenia’s development strategy. Fortunately, Armenia shows great potential for innovation-led growth due to its strong legacy of excellence in science, technology, education, research, the ongoing development of the innovation infrastructure, and what is crucially important, the presence of the Armenian Diaspora.
As discussed at the UNECE Policy Dialogue on “Leveraging Diasporas to Promote Innovation for Sustainable Development” in June 2021, the large Armenian Diaspora can play a central role in the country's development. Diaspora members often maintain strong connections and linkages to relatives in contemporary Armenia and promote Armenia’s integration into global financial and knowledge networks. For example, an Armenian financial technology start-up Cognaize has recently attracted USD 2 million in investment with the support of the diaspora-led business angel network Granatus Ventures. Another remarkable example - TUMO Center for Creative Technologies - a unique free-of-charge school founded by representatives of the Armenian Diaspora, was ranked first among the top 10 most innovative schools in the world in 2016.
However, for Armenia to become a knowledge-based economy the diaspora’s engagement in innovative initiatives, as well as the process of experimenting with and introducing new ideas, services, products, and technologies to the market must become systematic. This endeavour requires government support, to correct market failures and to support a business climate conducive to innovation. Armenian innovation stakeholders have identified effective innovation support infrastructure and using diaspora ties to foster cross-border knowledge absorption as central in this context.
To support Armenia in seizing existing opportunities for innovative development, UNECE has recently begun work on the second Innovation for Sustainable Development Review (I4SDR) for Armenia, following the first iteration in 2014 and building on the findings and recommendations of the recently launched UNECE Sub-regional Innovation Policy Outlook. The I4SDR will provide actionable recommendations to stimulate innovation activity and to improve the efficiency of the national innovation system. In the wake of the project launch on 8 October, government representatives, international and local experts, private sector, and academia attended the stakeholder consultations on 7 December to define the focus of the analysis thereby maximising the local buy-in and added value of the project.