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Education: Armenia’s Path to Stronger Economic Growth

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Better education and a stronger innovation drive are crucial for achieving higher rates of economic growth and prosperity in any country. Countries that prioritize improvements in education – from the pre-primary to the university level – and innovation are better positioned to adapt to economic change and help raise the living standards for their people.

Education equips individuals with the knowledge and skills necessary to contribute to the economy, with the ability to learn – and unlearn – continuously. Innovation involves the creation of new products, processes, and services that expand the capacity of enterprises and economies. In fact, the most innovative countries tend to be the most successful economically.

Take the case of Estonia. In 1993, Estonia’s GDP per capita was a modest about $6,480. In comparison, Japan’s was $24,000. Fast forward 30 years. Estonia’s GDP per capita was equal to that of Japan in 2022, at nearly $43,000. Estonia now boasts the highest PISA (Programme for International Student Assessment) scores in math, science and reading in Europe. A similar ‘miracle’ happened in Korea, a country that moved from developing country status to an advanced economy in just one generation. How can countries replicate Estonia’s or Korea’s success and achieve faster economic growth and standards of living that are like to those of high-income countries?

Through education and innovation.

Here in Armenia, education has been a priority since the country’s independence in 1991. The government has made efforts to increase the number of schools, provide free education for primary and secondary schools, and promote STEM (Science, Technology, Engineering, and Mathematics) education. As a result, Armenia has a high literacy rate of over 99% and over 60% of adults have completed at least secondary education.

Yet, the education system is not producing the needed outcomes. Children born in Armenia today will be only 58% as productive during their lives as they could have been if they had received quality health and education services available. Armenian children are expected to complete 11.3 years of schooling. This decreases to 8 years if the quality of education is factored in. Pre-primary school and secondary school enrollment is low compared to peer countries in Europe and Central Asia (ECA). It is the quality of education that is the most pressing concern. Armenia’s TIMSS mathematics score – a standardized test for children in grade 4 – is one of the lowest in the region. The quality of tertiary education is below the ECA average: it is nearly 30% lower than Georgia, and half as low as the new EU member states. These outcomes are not surprising, given that public spending on education is just under 2.7% of GDP in Armenia, which is half that of the EU.

The World Bank is helping Armenia improve its education system, including through the Education Improvement Project, which is enhancing the conditions for learning across educational levels by extending preschool coverage, providing laboratory equipment, informing curriculum revisions, and improving the relevance and quality of higher education institutions. The many outcomes of the project include new preschools in rural communities, training of preschool teachers, and grants to higher education institutions through the Competitive Innovation Fund. Under the EU4Innovation Trust Fund, the World Bank is also helping improve the quality of STEM education. By September this year, Armenia will have a fully revised STEM curriculum for middle and high schools (grades 5 to 12), improved learning materials, school-based STEM laboratories and as well as enhanced student-centered instructional methodologies/teaching methods.

Education is essential but alone is not sufficient to drive economic growth. How knowledge is applied by firms, researchers and workers through innovation is critical. In Armenia, there is a disconnect between education, research, and the link to entrepreneurs and markets. For example, academic research in Armenia is dominated by the National Academy of Sciences which comprises more than 30 separate research institutes. None of these institutes are formally integrated with any teaching university in the country. There is also a proliferation of universities in Armenia, with 26 public (state) and 33 private universities; many of the latter, in name only. In Denmark, a country with almost twice the population, there are only eight state-recognized and funded universities offering research-based education.

Consolidating the universities in Armenia, merging them with the research institutes, and focusing government attention on accreditation could help address some of these challenges. It is also essential to reform the university admission process to incentivize talented high schoolers to apply. The government could also support the commercialization of research. In many advanced economies, universities are prodigious producers of knowledge and basic research output, and the private sector, the user of this research, is very vibrant. Without practical application, research may have little impact on the country’s growth potential.

Extensive work by the World Bank shows that human capital is at the core of efforts to strengthen innovation and technology adoption. In Armenia, as in many other countries, human capital is one of the main binding constraints to growth.

While the government has taken significant steps and has initiated important reforms to promote both education and innovation, more is needed to realize their potential. By making a greater investment in education and innovation, Armenia can build a knowledge-based economy that can help the country deliver a development miracle and elevate standards of living to those of high-income countries. The dialogue at the recent panel discussion on “Growth, Education, and Innovation” could help policymakers in their efforts to transform education and innovation in Armenia.

This op-ed was originally published in Banks.am via World Bank

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Eastern Europe

Ukraine war: A new multipolar world is emerging

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Ukrainian defenders on the Leopard-2 tank at sunset. By Serhii Mykhalchuk image source: war.ukraine.ua

Russia’s invasion of Ukraine in February 2022 is undoubtedly one of the biggest geopolitical conflicts of the 21st century to date. What would be a regional issue in our analysis, turned into a global event with economic and geopolitical impacts that will last for decades to come. The uncritical analysis of the subject is the main obstacle to a real geopolitical comprehension of the ongoing process. Our goal is to make some considerations to fill these gaps.

               Russian demands about its geopolitical security have continuously been disregarded by either Washington or Brussels over the past three decades. On the contrary. Europeans and North Americans did their best to expand the European Union and NATO to Eastern Europe despite Moscow consistently expressing its dissatisfaction with such an advance.

               In fact, Russia has always represented a *geopolitical concern* to Washington due to its military and technological capacity inherited from the USSR. The “ideal” Russia for the West only occurred under the leadership of Boris Yeltsin (1991-1999) when the country made the transition to capitalism in a sudden and dramatic process, going through one of its most severe economic and social crises.

               Kyiv’s move towards the European Union and NATO accelerated Moscow’s determination to firmly secure, or at least make a concerted attempt to do so, the still unconcluded chapter after the end of the USSR: its geopolitical security, as well as Washington’s use of Ukraine as a future NATO military base posing a significant concern for Russia. The second invasion of Ukraine in February 2022 marked this second phase in our conception.

               Western perspective has a divergent viewpoint. Maintaining NATO created in the Cold War to face the threat of no longer existing in the post-Cold War scenario makes no sense. However, it makes sense when we think of the billions of dollars in sales of war material produced largely by the US to its European partners and the multi-million commissions involved for the middlemen. It is fundamental to keep Europe under Washington’s political and military domain. On the economic side, the expansion of the European Union over Eastern Europe followed the same logic: “By increasing the number of member states, the aim is to address the challenges faced by a problematic economic union that has been subject to internal questioning, culminating in the apex of Brexit in 2020

               Unlike the 2014 Crimean campaign when the Russian victory came relatively smoothly and quickly, the 2022 invasion may initially be considered, to say the least, disastrous. Moscow’s numerous errors in assessing the short- and long-term consequences of its subjugation strategy in Ukraine drew attention. The images of countless kilometers of trucks and military equipment along roads, the initial advance towards Kyiv, and various other parts of the country, followed by a withdrawal months later, exposed the flawed military calculations and the unforeseen consequences that ensued. This was despite Russia’s unquestionable military supremacy. The calculations were not well executed, leading to significant unforeseen consequences, despite Russia’s undisputed military dominance

               In the Western diplomatic area, the situation completely got out of Moscow’s control when the US had the perception that it could take advantage of the moment to weaken Vladimir Putin’s leadership, promote an “upgrade” in the criticized existence of NATO and facilitate a possible “regime change” through economic strangulation. But Washington and its allies also made some misjudgments. They underestimated the neutral stance of China and several other countries such as India and Brazil, in addition to several countries on the African continent, for example. And the worst: they also provided the beginning of the acceleration of the de-dollarization of the world economy with the economic sanctions against the Russians, uniting the objectives of several countries that already questioned the supremacy of the dollar as the dominant commercial transaction currency. A supremacy’s downfall could certainly take decades, but that seems to be already underway.

               We reiterate that the current Russian-Ukrainian conflict could never gain the international proportions that were generated from the action of the Washington-Brussels Axis. Their actions have directly impacted Europe, which bears the brunt of the consequences while the US benefits economically from Russian sanctions and Europeans suffer as much as Moscow from their effects.

               In the military field, Ukraine is only managing to be able to withstand the hardships of the war due to the full support given by NATO. Even as reports of the military prowess of Ukrainian soldiers were disseminated by Western media. Without that support, the war would probably have ended. On the other hand, despite the initial military mistakes, Moscow seems to have preferred a strategy aimed at the attrition of its enemy even knowing that time would somehow help Kyiv to receive more weapons from the Western military alliance and delay the finalization of its plans.

                It’s expected that this clash between NATO and Russia will bring about a permanent reordering in the power dynamics of geopolitical forces in the 21st century. The so-called “American Century” is being finalized by the rise of new and future powers such as China, whose global role is gaining strength. Beijing’s performance in the Russian-Ukrainian conflict demonstrates that its action is guided by long-term projects: collaboration in the weakening of the North American power to determine the “punishment” of its enemies through economic means, consolidating BRICS as a “global influencer”, the decrease of the dollar as an international currency and the support for a multipolar spectrum as the basis of the international system in the current century.

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Eastern Europe

Pakistan-Belarus Ties Set to Boost and Strengthen

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Image source: Pakistan MFA

The Republic of Belarus is a landlocked country in Eastern Europe. It is bordered by Russia to the east and northeast, Ukraine to the south, Poland to the west, and Lithuania and Latvia to the northwest. Covering an area of 207,600 square kilometers and with a population of 9.2 million, Belarus is the 13th-largest and the 20th-most populous country in Europe. The country has a hemiboreal climate and is administratively divided into seven regions. Minsk is the capital and largest city. Belarus is a developing country, ranking 60th on the Human Development Index. The country has been a member of the United Nations since its founding and has joined the CIS, the CSTO, the EAEU, the OSCE, and the Non-Aligned Movement. It has shown no aspirations of joining the European Union but nevertheless maintains a bilateral relationship with the bloc and also participates in two EU projects, the Baku Initiative, and the Eastern Partnership. Its strategic location has been more prominent due to the Ukraine crisis and has become the focus of the Western world due to its close relations with Russia.

Belarus–Pakistan relations refers to the current and historical relationship between Belarus and Pakistan. Pakistan was one of the first countries to recognize Belarus after the dissolution of the Soviet Union in 1991. Pakistan maintains an embassy in Minsk; Belarus maintains an embassy in Islamabad.

Pakistan and Belarus initiated joint ventures (JVs) in the textile, pharmaceutical, and lighting solution industries while sharing technological expertise with each other. Pakistan’s imports from Belarus stood at $42.65 million which mainly consisted of tractors (62.04%), artificial filament yarn (13.01%), and rubber tires (8.06%). Belarus has lauded Pakistan’s role and efforts in bringing peace and stability to the world by countering terrorism and offered his country’s full support in this fight.

On the invitation of the Minister of Foreign Affairs of the Islamic Republic of Pakistan H.E. Bilawal Bhutto Zardari, the Minister of Foreign Affairs of the Republic of Belarus H.E. Mr. Sergei Aleinik visited Islamabad from May 30 – 31, 2023 on an official visit.

During the visit, Foreign Minister Sergei Aleinik paid a courtesy call on Prime Minister H.E. Mr. Muhammad Shehbaz Sharif and the Chief of Army Staff General Asim Munir, in addition to holding comprehensive delegation-level bilateral talks.

H.E. Mr. Sergei Aleinik also held meetings with the Minister of Economic Affairs of the Islamic Republic of Pakistan H.E. Sardar Ayaz Sadiq.

During their meeting, the two Foreign Ministers had a wide-ranging and substantive discussion on a variety of topics including political, economic, technological, cultural, educational, and multilateral cooperation in an atmosphere of friendship and mutual understanding. The two sides agreed to take practical measures to translate the mutual goodwill between the two governments and their peoples into tangible cooperation in different fields.

The Ministers expressed satisfaction with the friendly relations based on mutual respect, friendship, and trust established between the Republic of Belarus and the Islamic Republic of Pakistan and highly appreciated the bilateral meetings and interaction at the highest and high levels that have taken place in recent years.

The Ministers appreciated the holding of the 6th Session of the Joint Belarusian-Pakistani Commission on Trade and Economic Cooperation on January 12-13, 2023 in Minsk under the chairmanship of the Minister of Energy of the Republic of Belarus H.E. Viktor Karankevich and the Federal Minister of Energy of the Islamic Republic of Pakistan H.E. Khurram Dastgir Khan.

The Ministers expressed their interest in strengthening cooperation within the framework of the Shanghai Cooperation Organization, the United Nations, and other International Organizations on matters of mutual interest, and reaffirmed their readiness to mutually support each other.

The Ministers noted the desire of both countries to expand the legal framework of bilateral relations and welcomed the signing of

the Agreement between the Government of the Republic of Belarus and the Government of the Islamic Republic of Pakistan on the Abolition of Visas for holders of Diplomatic and Service Passports as well as between the Institute of Strategic Studies, Islamabad, and the Belarus Institute of Strategic Research.

The Ministers intend to support business initiatives aimed at the development of trade and industrial cooperation between the two countries, among other things, through the participation in exhibitions and fair events in both countries, holding face-to-face and online negotiations, and business councils.

Taking into consideration, that February 3, 2024, will mark the 30th anniversary of the establishment of diplomatic relations between Belarus and Pakistan, the Ministers welcomed the intention to develop a plan of joint events dedicated to the anniversary of diplomatic relations.

The Minister of Foreign Affairs of the Republic of Belarus expressed his gratitude for the reception given to the Belarusian delegation and invited the Minister of Foreign Affairs of the Islamic Republic of Pakistan to visit the Republic of Belarus at a convenient time. The invitation was accepted with gratitude and the dates of the visit will be finalized through diplomatic channels.

Both countries are committed to supporting each other and benefiting from each other’s strengths. It is desired from both sides to enrich and strengthen the relations in all walks of life covering trade, economy, industry, science and technology, education, etc. Long lives Pak-Belarus friendship.

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Eastern Europe

Latvia risks to turn to a ghost state

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Latvia 2020 population was estimated at 1,886,198 people at mid year according to UN data.

At the beginning of 2022 population of Latvia accounted for 1 million 876 thousand people, which is 17.5 thousand people fewer than a year ago.

The current population of Latvia is 1,826,608 as of May 17, 2023, based on Worldometer elaboration of the latest United Nations data.

For many years Latvia has suffered from a so-called “brain drain”, a phenomena when young highly trained and qualified people emigrate from the country. Since Latvia became a member of European Union and Schengen Area and when working in other countries became especially easy, the human capital flight from the country has intensified and reached high figures, when Latvia lost many residents due to emigration.

The number of young people continues to has decline sharply. At the beginning of 2022, there were 234,500 boys and girls aged 13 to 25 living in the country. This is 12.5% of all residents. Behind the reduction of this group is not only a decrease in the birth rate, falling living standards but also emigration. The young and talented people prefer not to stay here.

One new reason for youth to leave the country has appeared this year. Latvia reintroduces compulsory military service. The decision was made by the country’s parliament on April 5. Latvia has not had compulsory military service since 2007 when it was abolished.

From 2024 onward, the number of conscripts will increase. The plan is to call up 7,500 Latvians every year, starting in 2028. This will increase the size of the army from over 22,000 soldiers to 50,000, including territorial defense and reserves.

The Baltic nation feels threatened due to the war in Ukraine. But, new public surveys show that many young men are not convinced that compulsory military service is the right reaction. Only a small share of people back compulsory military service.

Young men are known for their rebellious ways. So, it’s hardly surprising that the Latvian government’s recent decision to reintroduce compulsory military service has not gone down particularly well with them.

Far fewer people wanted to become professional soldiers. There have not been any national opinion polls conducted on the topic recently. But a study in May 2022 found that more than 40% of Latvians opposed it. According to Maris Andzans, a professor at Riga Stradins University, who wrote in a February briefing for the Washington-based Center for European Policy Analysis, support was lower among younger respondents, with only 34% in the 18-24 age group supportive of the idea.

In Latvia, there is also another segment of the population that doesn’t like the idea of military service. Some members of the country’s Russian-speaking minority are skeptical about what they perceive as the country’s pro-Western course. Russian-speakers make up about a quarter of Latvia’s 1.9 million-strong population. Joining the Latvian army to “fight against your own people” is not something they wanted to do. So many are planning to leave. So, a phenomena of “men drain” when young highly trained and qualified people emigrate from the country because of unwillingness to serve.

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