Armenia needs transition from `subsidizing stability` to `investing  in innovation` - Tigran Jrbashyan 

ArmInfo.Armenia needs to transition from "subsidizing stability" to "investing in innovation." It goes without saying that in public policy, rather than focusing on  the number of programs or their quantitative indicators, greater  importance should be placed on their interactions.

Tigran Jrbashyan, partner at Ameria and head of management consulting, writes about this in his article, discussing the lessons the country should learn  from the Nobel Prize in Economics.

The expert recalled that the 2025 Nobel Prize in Economics was  awarded to Philippe Aghion, Peter Howitt, and Joel Mochrie for  transforming Joseph Schumpeter's idea of "creative destruction" into  the modern theory of sustainable growth.

"In particular, their research confirms a key truth that even the  great Schumpeter sensed with his professional intuition: economic  development occurs not through the preservation of existing  structures, but through their constant renewal," noted Tigran  Jrbashyan.

In this context, the economist asked what exactly needs to be changed  in Armenia's economic policy. First and foremost, he points to the  need to target subsidy programs toward innovative results. "The state  subsidizes economic modernization, but considers only the newness  (unused) of equipment as a criterion of modernity. As a result, our  entrepreneurs often end up with obsolete technologies rather than the  latest generation. I have repeatedly spoken about the need for  stricter conditions for subsidized entities."

As Jrbashyan notes, the integration of science, technology, and  industrial policy is also important.  Currently, public policy in  these interconnected sectors is developed in isolation and does not  complement each other. For example, several months ago, the Ministry  of Economy circulated a Strategic Program for Improving the  Competitiveness of SMEs, and recently the Ministry of Education,  Science, Culture, and Sports announced the public discussion of a  Strategic Program for the Development of the Scientific Sphere for  2026-2030. Surprisingly, the second strategic program makes no  mention of the first. However, it is necessary to stimulate research  projects between universities, startups, and businesses. Moreover,  universities should become true bridges for the transition from  science to business," the expert noted.

The economist also pointed to the need to revise IT tax incentives to  focus on genuine innovation.  Jrbashyan emphasized that currently, IT  tax incentives partially include subsidies for companies providing  outsourcing services, which essentially subsidize the increased  competitiveness of other countries' IT products, while Armenia needs  to differentiate its approach, giving preference to organizations  working on their own products and technologies.

Human capital development is also crucial for transformation.  Currently, educational reforms are poorly connected to market  changes, while employers should be actively involved in the  development and implementation of programs, as well as the creation  of an "innovation skills indicator" to assess the workforce's  readiness for new directions.

The expert believes that changing the approach to public policy  development and moving toward a flexible approach is equally  important. Currently, the public administration system is slowly  absorbs innovations. At the same time, it is necessary to create  platforms-"sandboxes"-for policy development, where, through constant  innovation, new measures can be implemented and scaled up, ensuring  their high effectiveness.

In conclusion, Jrbashyan recalled the words of Schumpeter, who said:  "The process of industrial mutation, which continually revolutionizes  the economic structure from within, continually destroying the old  and creating a new one-this process of creative destruction-is the  essential fact of capitalism."