Kein Folientitel

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Model of a Knowledge-Based Economy for Armenia
Hayk L. Sargsyan, Yerevan State
University Kristine A. Antonyan, Yerevan State
University AIPRG Annual Conference Looking
Forward Global Competitiveness of the Armenian
Economy, May 17-18, 2008, Washington, DC.
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purpose ?? have a sustained long-run economic
growth adopting flexible economic policies in the
new postindustrial society. outline I. Discuss
long-run economic growth models with the
productivity as the central factor, outline the
knowledge as the main engine of productivity
growth in a knowledge-based economy. II.
Discuss Armenian economic growth in the
transitional period within qualitative indicators
and TFP growth trend. III. Decomposition of
estimated TFP with Knowlede Economy pillars,
revealing the strenghts and weaknesses the
country has and emphasize the needed directions
for policy towards a knowledge-based economic
model.
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Long-run growth models theoretical
considerations neoclassical growth theory using
exogenous production functions revealed that the
Black box residual is explained with capital
accumulation and hence technological progress,
resulting to a long-run sustained economic
growth endogenous growth theoryexplained the
driving growth of productivity or the unexplained
residual through the concept of the human capital
RD growth models considered the driving
development through adoption of innovations by
means of trade among countries qualitative
transformations and structural change
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Conclusion KE pillars
PRODUCTIVITY GROWTH
OUTPUT GROWTH
Technologies
Physical capital accumulation
Industrial society Industrial Economy
Innovations
Postindustrial society KE
Human capital accumulation
Human capital
Knowledge
ICT infrastructure
Education
Institutions
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Armenian economic growth is accompanied with

• The substitution of goods production and
  agriculture by services production appropriates
  the global trends. Still, international
  comparisons indicate, that the country
  appropriates to low income countries.
• 2. The growth in non-agricultural sector is
  characterized by labor productivity growth
  (output per worker). Yet, it is mainly expounded
  with the permanent decrease of employment rate
  during the whole transformation.
• 3. The poverty rate is high in the country
  (although, it has reduced from almost half of the
  population to 26,5)
• 4. The country is defined by unequal regional
  developments, mainly concentrated in the capital.
• 5. Continuous migration especially among younger
  population still exists in the country.

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6.
(1)
Picture 1. The TFP growth rate of RA in the
period of 1992-2006

• Armenian economicic gowth is described with
• Crisis (1991-1994)
• Stability (1994-2000)
• Improvement (2000-2006)

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Table 2. The TFP decomposition through the KE
pillars. KEI of Armenia and Estonia
Source World Bank, KAM, URL//www.worldbank.org/ka
m
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Conclusion
-In early transformational period, the crisis
destroyed the Armenian economy so much, that the
TFP present growth rates, calculated on low basic
figures, do not assure a competitive level of
knowledge-based economy -The growth is
insufficient for being sustained
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Education- the pillar of knowledge-based economy
A. Picture 2. Enrollment in education
institutions by age
Source NSS, Education Transitions in Armenia,
UNDP, 2006.
Higher education is rapidly becoming inaccessible
for the greater part of the population.
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B. The quality of Education - the combination of
the three components - education inputs,
educational process and outputs.
INPUTS
PROCESS
OUTPUTS
The level and quantity of school (middle-school,
high school, after-school) graduates entering
labor market
Financing
Basic education process
Internet at schools
Quality of teachers
The level and quantity of school (middle-school,
high school, after-school) graduates continuing
studying
Tertiary education process
Selection of lecturers, students
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Conclusion
Picture 3. . Employment by education degree
The economic growth in Armenia is described with
worsening quality of the human capital (the
portion of human capital decreases in TFP)
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Innovation- the pillar of knowledge-based economy
The main issues through several substantial
indicators
Public
National producers and business environment
Expenditures on RD
External financing
Researchers holding scientific degree, average
age of researchers holding scientific degree,
average age of scientific equipment
Expenditures on Innovations
Innovative enterprises in industry
Innovative output in industry
The number of granted patents
Science-HEI-private institutions cooperation
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Conclusion estimating policy Implications
towards an Innovative economy

EXTERNAL SHARE
Towards KE
STATE
NGOs International organizations
1. Venture funds, 2. techno parks
Estimating priorities
ECONOMY
SCIENCE
INNOVATION
EDUCATION
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ICT- the pillar of knowledge-based economy
The main issues through several substantial
indicators
Provision of the population with home telephone
sets, mobile phones, successful calls
The number of Internet users, Internet access
The number of ISP, Internet prices
Phones, Computers, Internet accesses from
workstation
E-commerce
Online government resources
E-governance
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Conclusion estimating policy Implications
towards a E-society
ICT infrastructure
social
economic
public

Information society
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CONCLUSION

• Decomposition of TFP growth estimates, that
• The country has a comparative advantage in the
  factor of human capital, which though is
  worsening
• The country has improved its competitiveness
  through adopting new technologies, increasing the
  knowledge-based potential of its productions and
  services
• ICT, as an infrastructure becoming the most
  important pillar for a KE, is still on a low
  level in the country, thus preventing economic
  competitiveness, productivity growth,
  transformation to a KE and hence long-run
  sustained economic growth

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Long-run policy conclusions

• Encouraging education, science and innovation
  with new strength and quality within a
  reconstruction of new education-innovation-econom
  y model, that will form a base for passing to
  the third, innovative level of competitiveness,
• Transforming the Book Society to E-Society,
  within rapid development of ICT infrastructure
  and its assimilation in the social, public and
  economic aspects of life, such as e- commerce,
  e-governance, e-learning etc.
• Coordination the activities of different
  government institutions and donor initiatives.