Financing Needs to Increase – Accompanied by Reforms and Shifts in Approach

It is clear that Armenia significantly lags its peers in public spending on education. The question is whether the current system is apt and ready enough to accommodate increases in available financing or does it first need to be reformed and modernized, in line with labor market requirements, before such allocations are increased. One is inclined to interpret the recently announced and substantially higher budgetary allocations to the Ministry of High Tech Industry in such a way. The financing to this newly-created Ministry quadrupled, reflecting its strategic alignment, effectiveness and purpose-orientation.

The nature of educational reforms is outside of the scope of this article, but it is likely to include financial redistribution between academic domains, faculty preparedness, etc. This work is currently being conducted by the Ministry of Education. Encouragingly, Prime Minister Pashinyan has made his determination known on the importance of aligning Armenia’s educational sector with the ambitions and the development potential of the nation.

Reforming the domestic educational sector is a difficult task with many stakeholders and suboptimal incentive structures. Prior to 2018, due to inefficiencies on the public governance side, the approach seems to have been to hold government revenue intake in check so as to avoid public sector misallocation of resources the private sector could invest more effectively.

Hopefully, with a reduced level of nepotism and graft, and more efficient educational sector governance, the government will be able to take on a bigger and more productive role in the educational sphere.

An ideological shift is required. For years, labor education and training in the Armenian private sector in general—and in Tech/IT (incl. R&D) in particular—have been driven to a large extent by private companies themselves. Education, one of the main responsibilities of any government, was to some degree implicitly outsourced to the private sector. The idea, arguably, went along the following lines: “While the public sector is inefficient, let the private sector educate their cadres according to their proprietary needs and preferences. After all, they are the ones accumulating the profits on this labor input.” While some may still sympathize with that mindset, one quickly realizes that any expenditure borne by a private company to assume the educational responsibilities of the government will result in higher costs, lower profits and consequently, lower investment and hiring propensity. Like it or not, countries compete on labor force preparedness and quality to attract investment.