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Horizon 2020 Policy Support Facility

Horizon2020 PSF Specific support to Kick-off meeting Brussels 16.04.2019 Background report Fast facts

Country / Capital The of Armenia / Population 2 .93 milion Area 29.743 sq. km (11.500 sq. miles) Major languages Armenian (native), Russian, English Major religion Life expectancy 71.3 years (men), 77.6 years (women) Monetary unit (AMD) Exchange rate 570.56 AMD/EUR(2018) GDP per capita, PPP 8,539 EUR (2017) Products: ore, cigarette produce, brandy, precious and Main exports non-precious metals, diamonds, textile produce, electricity, foodstuff, Services: IT, System of law Continental

Horizon 2020 Policy Support Facility 2 Fast facts

Ratings Moody’s rating B1, positive (March 9, 2018) Fitch (long-term IDRs) rating B+, positive ( 15, 2018) Ranking Ease of Doing Business 41 (2019, out of 190 countries) Index of Economic Freedom 47 (2019, out of 180 countries) 49 (2017, out of 130 countries) Global Competitiveness Index 70 (2018-2019, out of 140 countries) Global Innovation index 68 (2018, out of 126 countries)

Horizon 2020 Policy Support Facility 3 In April, 2018 through “Velvet revolution” the opposition leader became prime minister of Armenia.

Priorities of new Government program • Protection of external and internal security of RA, guarantee of Artsakh’s security and its maintenance • Competitiveness of the economy • Protection of human rights • Democracy and the rule of law • Consolidation of human, economic, financial, intellectual potential of all for the RA development goal • Government accountability and transparency and the rejection of corruption • Separation of political and business sectors • Encouraging education and healthy living • Poverty reduction through employment and education

Horizon 2020 Policy Support Facility 4 SOCIAL AND ECONOMIC SITUATION IN ARMEINA

Horizon 2020 Policy Support Facility 5 After independence the population has constantly decreased: 2 waves of massive migration in 90s and mid 2000s.

Armenia’s population, thousand people 3448.6

3260.3 3226.9 3156

3026.9 3021.4 3017.1 3010.6 2998.6 2976.2 2972.7

1989 1995 2000 2005 2011 2012 2013 2014 2015 2016 2017

Horizon 2020 Policy Support Facility 6 Although being in the group of upper-middle income country, Armenia’s rate of economic activity is closer to the average of high-income countries.

Economic activity rate, % 60.67 60.94 60.62 60.76 60.32 59.80

58.81 58.65 58.30

2011 2015 2018

High income countries Republic of Armenia Upper-middle income countries

Horizon 2020 Policy Support Facility 7 The share of the tertiary and postgraduate students in the economically active population increased primarily in expense of reduced TVET share.

Economically active population by educational level

25% 25% 27% 31% 29% 29% 30%

27% 26% 26% 24% 23% 24% 23%

48% 48% 47% 46% 48% 48% 48%

2011 2012 2013 2014 2015 2016 2017 No specialization TVET Tertiary and postgraduate education

Horizon 2020 Policy Support Facility 8 Armenia is 4th by GDP per capita in PPP among EP countries despite recorded high growth during last 6 years.

GDP per capita, PPP, 2017 and CAGR 2011-17 45,000

40,000

35,000 6.5% 5.4% 30,000 5.3%

25,000 1.6% 1.7%

20,000 0.8%

15,000 9,647 10,000

5,000

- Armenia

Horizon 2020 Policy Support Facility 9 National income increased significantly during the first years of the 2000s and shrank sharply caused by the economical crisis. Even with the current growth rates it hasn’t recovered to pre-crisis level yet.

Armenia GDP annual growth %, 2004-2018

20.0

15.0 13.9 13.2 13.7 10.5 10.0 6.9 7.2 7.5 4.7 5.2 3.3 3.6 5.0 2.2 3.0 0.2 0.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 -5.0

-10.0

-15.0 -14.1

-20.0

Horizon 2020 Policy Support Facility 10 Agriculture still plays a relatively important role with high share in GVA and the share of service in GVA significantly increased during 2003-2017.

GVA structure in Armenia, % share

47% 47% 47% 48% 49% 49% 49% 52% 54% 53% 53% 53% 55% 54% 55%

9% 9% 8% 8% 6% 6% 6% 6% 5% 6% 6% 6% 5% 5% 5% 11% 14% 15% 16% 20% 21% 22% 15% 15% 13% 12% 11% 10% 10% 8% 13% 13% 12% 11% 9% 11% 11% 10% 11% 10% 9% 8% 10% 11% 11% 17% 16% 16% 16% 14% 14% 14% 16% 14% 15% 15% 16% 16% 18% 17%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Agriculture Manufacturing Mining and quarrying Utility Services

Horizon 2020 Policy Support Facility 11 Armenia enlarges the access to foreign markets due to the international cooperation.

International cooperation

January, 2015 (EAEU) May, 2015 and Investment Framework Agreement (USA) November,2017 Comprehensive and Enhanced Partnership Agreement(EU)

Horizon 2020 Policy Support Facility 12 Key challenges

• Geopolitical situation in the region (Armenia- -Azerbaijan, -US, Georgia-) • High level of poverty and unemployment • Spatial disparities of economic activity • Deteriorating educational and scientific base • Resource intensity of the exports • Limited connectivity to export markets • Worsening demographics

Horizon 2020 Policy Support Facility 13 GOVERNANCE OF THE NATIONAL R&I SYSTEM

Horizon 2020 Policy Support Facility 14 In the Armenian institutional set-up, innovation and science are two separate policy domains with clearly distinguished roles and responsibilities.

Science Innovations The Science Committee of the Ministry of Ministry of Economic Development and Education and Science Investment • Enterprise Incubator Foundation • National Centre of Innovation and Entrepreneurship of Science • Small and Medium Entrepreneurship Development Centre of Armenia • Armenian Intellectual Property Agency (AIPA), • National Institutes of Standards • National Institute of Metrology

Horizon 2020 Policy Support Facility 15 Government’s priorities in Science for 2017-2020 • Improvement of the science and technology management system Objectives • Introduction of an efficient system for re-production of personnel • Promoting research of fundamental and applied • Establishing preconditions to form synergetic system of education, science, technology and innovation, • Primary development of , • Development of international scientific cooperation, ensuring smart specialization platform.

• Armenology Priorities • Life Sciences • Secure and Efficient Energy • Key Enabling Technologies, Information and Communication Technologies • Space, Earth Sciences, Sustainable Use of Natural Resources • Basic Researches for Key Problems of Scientific and Socio-Economic Development

Horizon 2020 Policy Support Facility 16 National innovation strategy suggests three pathways: technology niche leadership, innovation for export growth and challenge driven innovation.

MAIN CHALLENGES MAIN APPROCHES MAIN IMPACT (2030) Weak technology progress & Drive Technology • 3-5 tech clusters with ECEI cluster excellence silver label (baseline none) knowledge Specialisation • 15,000 MS and 1,100 PhD graduates in • Weak science & technology Concentrate efforts to priority advanced technologies (baseline specialisation and under-investment achieve leadership in n.a.) • Output of high-tech manufacturing and • Science & education system distinct technology niche contributes rarely to development services -USD 800 million

Low Competitiveness & Focused • Number of innovative active companies Business Innovation Catch-up triples to 30% (baseline <10%, 2017) • Productivity level in innovative active and • Low level of company innovation Foster managerial and export oriented companies triples activities and ability for absorption technological upgrade for (baseline 39,000 USD, 2017.) • Limited competitiveness in regional and high value export sectors • Exports grow about 10 times (baseline international markets USD 585million, 2017) Limited Innovation in Use innovation as • Improved performance on resource efficiency, and for society driver income inequality (baseline n.a.) • • Needs for cost-effective and innovative Develop innovation Armenia in top 30 in for government solutions to ‘societal challenges’ partnerships to solve societal effectiveness (baseline 79th, 2017). challenges and use this as a • Environmental, health and social sectors value • Low understanding & usage of innovation as added increases driver for well-being is limited in society driver to change perception of innovation

Horizon 2020 Policy Support Facility 17 FINANCING OF R&D

Horizon 2020 Policy Support Facility 18 Government expenditure on science grew between 2013 and 2017. No increase is foreseen in next 3 years.

State expenditures for science in AMD and constant 2017 USD and its share in GDP 35 0.28% 0.28% 0.30% 0.26% 0.25% 0.26% 0.24% 30 0.25% 0.22% 25 0.20%

20 0.20%

0.18% 0.15%

15

0.10% 10

0.05% 5

0 0.00% 2013 2014 2015 2016 2017 2018 2019 2020 2021 In bln AMD in mln USD Share in GDP

Horizon 2020 Policy Support Facility 19 Expenditures on R&D in Armenia are in the lowest quantile in the peer group, in line with its neighbors. On the same time, the share of the GERD in GDP has decreased during 2011-2016. GERD to GDP, in %, 2016 vs. CAGR 2011-2016

4.5% Israel

4.0%

3.5%

3.0%

2.5% GERD % in GDP, 2016 GERD % GDP, in 2.0%

Estonia Ireland 1.5% Ukraine Lithuania 1.0% Belarus Latvia Moldova 0.5% Azerbaijan Armenia 0.0% -15.0% -10.0% -5.0% 0.0% 5.0% Change of GERD share in GDP, CAGR 2011-2016

Horizon 2020 Policy Support Facility 20 The largest share of the budget was allocated to cover operational and maintenance costs of public research institutes and ensure their functionality including the premiums for scientific degrees.

Allocation of funding volumes according to the types of financing of scientific and scientific-technical activities

2015 2016 2017 2018 2019 2020 2021 Basic funding including 77.2% 77.3% 76.4% 72.9% 73.3% 73.3% 73.3% premiums for scientific degree Target program financing 13.2% 13.1% 12.9% 18.0% 18.0% 18.0% 18.0% Competitive research grants 9.6% 9.6% 10.7% 9.2% 8.7% 8.7% 8.7% (topic/thematic financing)

Horizon 2020 Policy Support Facility 21 The 66% of science budget in 2017 was allocated in three fields (natural sciences, engineering & technology and Armenology&humanities).

Armenian science budget (2017) by field of science

Social Sciences Medical Sciences 4% 3% Agricultural sciences 4% Natural Armenology Sciences and Humanities 36% 14%

Engineering and Technology General 16% 23%

Horizon 2020 Policy Support Facility 22 R&D PERFORMERS

Horizon 2020 Policy Support Facility 23 The small budget is distributed among many institutions.

Distribution of Scientific Institutions engaged in state programs by fields of science and type of institutions as of 2017 Grand Filed/Type of Institutions NAS Private State HEI Total Chemistry and earth sciences 5 1 6 - 12 Mathematical and technical sciences 4 4 1 - 9 Natural Sciences 8 2 3 - 13 Physics and astrophysics 5 - 3 - 8 Social sciences 12 3 19 - 34 Multidisciplinary - - - 15 15 Total 34 10 32 15 91

Horizon 2020 Policy Support Facility 24 QUALITY OF THE SCIENCE BASE

Horizon 2020 Policy Support Facility 25 Number of published documents increased by 17% in 2011-2018 (Web of Science).

Number of publications in 2011-2018

1144

1137

1129

1103

1089

1072

1067 1067

1057

1054

1047

1027

958

950 903

2011 2012 2013 2014 2015 2016 2017 2018 Web of Science Scimago

Horizon 2020 Policy Support Facility 26 Armenia is underperforming Ukraine and Belarus by number of publications, but is the leader among EP countries by number of publications by per million population.

Israel 159,261 Ireland 23960 Ireland 115,336 Israel 18280 Ukraine 56,631 Estonia 16193 Lithuania 27,002 Lithuania 9549 Estonia 21,301 Latvia 7563 Latvia 14,677 Armenia 2810 Belarus 12,853 Georgia 1765 Armenia 8,235 Belarus 1352 Georgia 6,559 Ukraine 1263 Azerbaijan 5,663 Moldova 983 Moldova 3,489 Azerbaijan 574

Cumulative publications of Armenia, Israel, Ireland, EP and Baltic Cumulative publications of Armenia, EP and Baltic countries countries in 2011-2018 by per million population in 2011-2018

Horizon 2020 Policy Support Facility 27 By the share of cited documents Armenia outperforms not only EP countries but also Ireland, Lithuania and Latvia.

Share of cited documents in total publications %, 2016

Estonia 67.3 Israel 67.1 Armenia 63.1 Georgia 59.8 Ireland 57.7 Belarus 57.0 Lithuania 56.7 Azerbaijan 54.9 Ukraine 52.6 Moldova 49.1 Latvia 44.3

Horizon 2020 Policy Support Facility 28 Overwhelming part of publications came form Natural Sciences followed by Medical and health sciences.

Publications in 2011-2018 by research 100% Humanities 90% 8.0% 10.0% 10.4% 9.0% 11.6% 10.0% 13.7% 12.5% 80% 13.8% 15.3% 14.1% 11.5% 11.6% 13.4% 15.6% 12.3% Social sciences 70%

60% Agricultural sciences 50%

40% Medical and health 72.7% 71.3% 71.6% 70.0% 67.2% 71.2% 68.5% 71.6% 30% sciences

20% Engineering and technology 10% Natural sciences 0% 2011 2012 2013 2014 2015 2016 2017 2018

Horizon 2020 Policy Support Facility 29 According to SCimago database Physics and astronomy has the highest ranking but its position worsened by 7 places compared to 2011. The largest improvement in ranking recorded Economics, Econometrics and Finance.

Ranking of different subject areas in 2017 and their changes during 2011-2017 63 Physics and astronomy -7 82 Chemistry -3 82 Materials Science -12 83 Mathematics -19 86 Engineering -12 88 Arts and Humanities 1 91 Earth and planetary sciences -9 92 Economics, Econometrics and Finance 51 95 Dentistry 12 95 Neuroscience -18

Rank Change in rank

Horizon 2020 Policy Support Facility 30 74% of documents in Physical Sciences and Astronomy, which is the leading subject area in the field of science of Armenia, was cited during 2011-2018. Subject areas with highest percentage of citations, for 2011-2018 (more than 100 published documents) Published Subject area Share of cited documents in total, % documents Physics and astronomy 4547 74 Earth and related environmental sciences 205 64 Materials engineering 261 62 Chemical sciences 682 61 Other engineering and technologies 283 61 Environmental engineering 112 56 Biological sciences 626 54 Nano-technology 166 54 Mathematics 606 52 Basic medical research 380 44 Mechanical engineering 241 43 Health sciences 175 38 Electrical eng., electronic eng. 359 30 Clinical medicine 614 29 History and archaeology 109 26 Computer and information sciences 189 24

Horizon 2020 Policy Support Facility 31 On average 63% of the publications in the field of Natural Sciences were done through international collaborations.

Average International collaborations 2011-2018 Average of Average of Share of Subject areas documents international international published collaborations collaborations Natural sciences 823 519 63%

Engineering and technology 158 80 51%

Medical and health sciences 125 58 46%

Agricultural sciences 10 6 60%

Social sciences 32 14 44%

Humanities 20 4 20%

Horizon 2020 Policy Support Facility 32 Thanks to diaspora links Armenia has a relatively high rate of international collaboration of scientists.

Share of international collaborations, 2011-2017 70%

60% • International publications – 50% increase of almost 77% • Physics & Astronomy - 65% in total 40% collaborations in 2017 • Armenia’s partners - US, , 30% Russia, and

20%

10%

0% 2011 2012 2013 2014 2015 2016 2017

Scimago WebofScience

Horizon 2020 Policy Support Facility 33 Armenia has a revealed comparative advantage in the field of Physical Sciences & Astronomy and Mathematics compared to the World.

Comparison of Armenia’s and World’s shares of subject areas, 2011-2018

44.7% Physical sciences and astronomy 6.3% 6.7% Chemical sciences 6.9% 6.2% Biological sciences 8.5% 6.0% Clinical medicine 16.4% 6.0% Mathematics 2.2% 3.7% Basic medical research 6.7% 3.5% Electrical eng, electronic eng 6.0% 2.8% Other engineering and technologies 3.1% 2.6% Materials engineering 4.3% Mechanical engineering 2.4% 2.2% Armenia 2.0% Earth and related environmental sciences 3.7% World 1.9% Computer and information sciences 4.0% 1.7% Health sciences 4.4% 1.6% Nano-technology 1.1% 1.1% Environmental engineering 2.6% 1.1% History and archaeology 1.3%

Horizon 2020 Policy Support Facility 34 Armenia’s best performing field of science by H-Index is Physics and astronomy and one of the worst performing fields is computer science.

Subject areas with the highest H-index 146

73 63 54 47 40 40 33 29 27

Horizon 2020 Policy Support Facility 35 Armenia is the 2nd by H-index among EP countries by its H-index underperforming only Ukraine.

H-indexes of benchmark countries, 2017 Israel 624 Ireland 451 Estonia 234 Ukraine 225 Lithuania 179 Armenia 160 Belarus 158 Georgia 155 Latvia 142 Moldova 97 Azerbaijan 87

Horizon 2020 Policy Support Facility 36 Armenia fares only 86nd on R&D expenditure indicator and lags behind many of its competitor countries.

Company spending on R&D vs. university-industry collaboration on R&D, 2018 7

6

Ireland Israel 5

4 Azerbaijan Lithuania

Ukraine Estonia industry collaboration in in industry collaboration - Armenia Georgia Latvia R&D, GCR value 2018 value GCR R&D, 3 Moldova

University 2

1 0 20 40 60 80 100 Company spending on R&D, GCR value

Horizon 2020 Policy Support Facility 37 The numbers of companies and employees are not huge and the utilization of the technologies is still experimental in most companies.

Number of companies and employed engineers in selected disruptive technologies in Armenia, 2017

Number of engineers Number of Technologies (upper bound estimates) companies Machine Learning / AI 100 14 and Drones 40 5 Internet of Things 50 6 Blockchain 30 2 Big Data and cloud computing 200 12 3D printing 25 4 Augmented and Virtual Reality 25 4 Cybersecurity 40 6

Horizon 2020 Policy Support Facility 38 HUMAN RESOURCES

Horizon 2020 Policy Support Facility 39 Despite the increase of government expenditure on education to $290 million in 2019 Armenia underperforms its peers both in the field of general and higher education.

Gov.expenditures on education of benchmark countries Expenditure on education Expenditure on higher education Country Year % of GDP % of GDP Armenia 2.3 0.22 2017 Azerbaijan 2.9 0.5 2016 Belarus 4.8 0.79 2017 Georgia 3.8 0.39 2017 Estonia 5.2 1.41 2015 Israel 5.9 0.95 2015 Ireland 3.8 0.88 2015 Latvia 5.3 1.18 2015 Lithuania 5.2 1.18 2015 Moldova 6.7 0.99 2016 Ukraine 5 1.53 2016 EU28 average 5.1 - 2015

Horizon 2020 Policy Support Facility 40 STEM graduates account 18-19% of graduates in Bachelor’s and Master’s degrees.

Bachelor's degree Master's degree

38.1% 40.8% 42.1% 40.0% 54.8% 52.3%

18.8% 18.7% 17.8% 18.1% 17.6% 5.7% 15.5% 15.3% 9.4% 6.1% 9.2% 7.0% 34.0% 36.2% 27.8% 31.1% 20.5% 23.1%

2015 2016 2017 2015 2016 2017 Economics Education & Pedagogy STEM Other

Horizon 2020 Policy Support Facility 41 Though the interest in STEM field increases in Armenia, we are still behind from the targeted groups of countries’ averages.

23.1% 23.6% 22.9% 21.8% 21.4% 20.9% 18.8% 18.7%

15.5%

2015 2016 2017 Armenia High Income Countries Upper Middle Income Countries

Horizon 2020 Policy Support Facility 42 The number of scientists dropped from 25,344 in 1991 to about 5000-6000 currently. According to the Science Committee of RA the number of people working in the field of science is 6057, out of which 3951 are researchers and 2573 from them have a science degree. Number of R&D staff by education level (2017)

Higher education Vocational Education level Grand Other Total Total PhD education Doctor

Research-specialists 3544 495 1553 25 19 3588

Technicians 98 - - 93 28 219 Support staff 208 1 2 207 112 527 Other 283 - 1 44 161 488 Total 4133 496 1556 369 320 4822

Horizon 2020 Policy Support Facility 43 Demographic hole in the scientific community(45-49 age group) is a result of the transition period in the (the collapse of the ).

Scientific grade holder’s structure by age group (scientists engaged in state 204 programs), as of July 2016 211 184 156 140 130 121 105 104 101 100 8794 78 81 86 60 35 16 16 2 3 5

25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 Grand Doctor PhD

Horizon 2020 Policy Support Facility 44 INTERNATIONAL R&D COOPERATION AND MOBILITY

Horizon 2020 Policy Support Facility 45 Armenia launched its cooperation with Horizon 2020 in May 2016.

H2020 Legal Names of RA institutions Participations National of the RA 7 Institute for informatics and automation problems of the national academy of sciences of the RA 4 Small and medium entrepreneurship development national center of 3 Information society technologies center 2 2 Yerevan State Medical University after Mkhitar Heratsi 1 Center for Ecological-Noosphere Studies National Academy of Sciences of the RA 1 Consulting Group-am 1 ACBA leasing credit organization closed joint stock company 1 Grovf LLC 1 Educational and cultural bridges 1 Center of medical genetics and primary health care 1 "" M.Mashtots institute of ancient manuscripts 1 Scientific and production center Armbiotechnology NAS RA 1 Institute for physical research of national academy of sciences of Armenia 1 A.I. Alikhanyan national science laboratory 1

Horizon 2020 Policy Support Facility 46 FRAMEWORK CONDITIONS FOR R&I

Horizon 2020 Policy Support Facility 47 Armenia has made progress in improving its business environment but remains well below neighboring Georgia (6th rank).

Armenia’s rankings on Doing Business topics

Starting a Business 8 Dealing with Construction Permits 98 Getting Electricity 17 Registering Property 14 Getting Credit 44 Protecting Minority Investors 51 Paying Taxes 82 Trading across Borders 46 Enforcing Contracts 24 Resolving Insolvency 95

Horizon 2020 Policy Support Facility 48 Armenia shares strong performances on health, macro-economic stability and education and skills while significantly underperforms in Innovation capability.

Armenia’s Performance Overview 2018, GCR 82.7 72.4 66.3 67.6 65 59.9 59.2 61.2 60.2 54 54.2

36.7 38.8

Skills

ICT

Health

Overall

adoption

Institutions

Market size Market

stability

Infrastructure

Labour market Labour

Financial system Financial

Product market 0 market Product

Macro- economic Macro-

Business dynamism Business Innovation capability Innovation Overall Enabling Human Capital Markets Innovation Score Environment Ecosystem

Horizon 2020 Policy Support Facility 49 Examples of innovation enabling platforms in Armenia

Business incubators and accelerators Diaspora led networks and initiatives • Technology Centre (GTC) • The Foundation for Armenian Science and Technology • Technology Centre (VTC) • ArmTech • Viasphere Technopark • Institute • “IT ” • The Armenian Engineers and Scientists of America • The Tumo Centre for Creative Technology • Microsoft Innovation Centre • IBM Innovative Solutions and Technologies Centre (ISTC) • The Engineering • Regional Nokia Mobile Application Laboratory for Eastern • Armenian National Engineering Laboratories • The ICT Armenian-Indian Centre for Excellence • The Convergence Centre for Engineering and Applied Science (in the process of construction)

Horizon 2020 Policy Support Facility 50 Armenian researchers are less active in patenting.

Patents in force per million inhabitants, 2016 vs. CAGR 2012-2016 10%

2016 Estonia - Latvia 5% Azerbaijan

Georgia 0% Ukraine - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Lithuania -5% Armenia

-10% Number of patents CAGR, 2011 CAGR, Number ofpatents Belarus

-15% Number of patents, 2016

Horizon 2020 Policy Support Facility 51 The majority of patent applications are submitted by national applicants.

Number of invention patent applications in Armenia, 2011-2017 137 121 126 121 113 107 92

1310 4 3 6 5 2 2 2 1 2 2 3 2

2011 2012 2013 2014 2015 2016 2017 National applicants Foreign applicants Including՝ PCT procedures

Horizon 2020 Policy Support Facility 52 The field of human necessities is the leader both for national and foreign applications.

Number of patent applications in Armenia by the field of technology, 2011-2017

292 304

198 208 168 176 141 147 139 149 109 113 69 72

12 8 10 0 1 1 4 6 10 3

A. Human B. Performing C. Chemistry, D. Textiles, paper E. Fixed F. Mechanical G. Physics H. Electricity necessities operations, metallurgy engineering; transporting lighting; heating; weapons; blasting National applicants Foreign applicants Total

Horizon 2020 Policy Support Facility 53 Armenia shows relatively higher level than average results both in terms of high-tech exports and its growth rates during the last 6 years compared with EP peers.

High-Tech Exports (in percentage to total manufactured exports) in 2017 vs. CAGR 2011-2017 20%

2017 Armenia -

15% Georgia Latvia

CAGR, 2011 CAGR, 10%

Belarus 5% Azerbaijan Lithuania Estonia Ukraine 0% EU.28 0% 5% 10% 15% 20% Ireland 25% Moldova Israel -5% High-tech exports share, 2017

Horizon 2020 Policy Support Facility 54 Armenia shows moderate results on cultural and creative exports.

Cultural and creative output service exports, Armenia and benchmark countries, 2018

Israel 2.1% Estonia 1.5% Latvia 1.3% Moldova 0.5% Lithuania 0.5% Armenia 0.4% Georgia 0.3% Ukraine 0.1% Ireland 0.1% Belarus 0.1%

Horizon 2020 Policy Support Facility 55 ARMENIA’S INNOVATION CHALLENGES

Horizon 2020 Policy Support Facility 56 The current state of the Armenian innovation system is far from optimal, but there are a number of improvements.

• Current developments • High recognition of innovation on policy level • Internationally competitive research capabilities in selected fields and relatively strong scientific output results • Success in building dynamically developing and internationally linked innovation ecosystem in ICT and, to some extent, engineering service sectors • Networked and experienced diaspora in science, technology and business sectors • Large-scale educational initiatives and positive attitude towards education • Embryonic innovation support services (funded by government, donor and diaspora).

• Key challenges • Underinvestment in science and fragmentation • Quality of education • Week research-industry linkages • Low absorptive capacity of local private sector • Absence of innovation strategy and focus

Horizon 2020 Policy Support Facility 57