Armenia: Investments in human capital key to resilient growth in COVID-19 era

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Following the launch of the Human Capital Project in 2018, the Armenian government and the World Bank undertook a systematic diagnosis of constraints to the development of human capital. We report our findings in Survive, Learn, Thrive: Strategic Investments in Human Capital for a More Prosperous and Inclusive Armenia, which identifies catalytic investments that can help children and youth in Armenia compete in tomorrow’s global market.

Fadia M. Saadah, World Bank Regional Director of Human Development for Europe and Central Asia, reflects on whether to rebuild better in the era of COVID-19 through training and activation of human capital in Armenia .

Q. What do you think are the main challenges facing the formation and activation of human capital in Armenia?

In many ways, Armenia has dramatically improved health and learning through access to services. The primary and middle school enrollment rate is over 90%, 100% of deliveries are attended by a skilled health care provider, and improved targeting of social transfers has helped reduce poverty and improve access to education and health care in low-income households. Between 1990 and 2017, life expectancy increased from 73.3 years to 78.7 years for women and from 66.7 years to 72.4 years for men.

There is still room for improvement, however. armenia Human capital index is 0.58, which means that a child born today in Armenia would be 58% as productive as it could have been in adulthood if she had enjoyed full health and comprehensive education. Learning outcomes also vary widely by gender and income, high out-of-pocket payments reduce access to health services, and the labor market programs that are needed to activate human capital are few and small-scale. .

The gains of the past two decades are at risk due to the COVID-19 pandemic, which is expected to cause real gross domestic product to contract by 6.3% in 2020. Poverty rates are expected to increase and competing public expenditure needs will reduce fiscal space for health and education.

Q. What strategic investments do you recommend in the short and medium term for Armenia to meet the challenge of recovering from the COVID-19 pandemic while investing in human capital development?

The report underlines the importance of investments in human capital for economic growth in Armenia. In view of the COVID-19 pandemic, the goal of reforming the health, education, social protection and employment systems is linked to the urgent task of increasing resilience to future shocks.

In the health sector, this will involve establishing comprehensive surveillance systems, investing in quality primary health care, and reforming health financing to ensure that people have access to services through a program. fund that provides incentives to reduce out-of-pocket payments and improve health. COVID has also revealed the important role of technology in social sectors. Telemedicine and other digital tools, for example, offer opportunities to fill gaps in physical access to care during and after the pandemic.

The COVID pandemic has created challenge and risks for learning outcomes, which will have a long-term impact on human capital. It is urgent to recover the learning losses. Health protocols that prevent the spread of infections will need to be implemented so that schools can reopen safely.

At the same time, Armenia will need to support teachers with training and other tools to provide high quality distance education. Counseling, remedial education, and financial incentives can help keep children and youth enrolled in schools and improve learning outcomes.

To ensure that no family is left behind, Armenia can build on the successes of the social protection system through the integrated social case management program, which connects poor and vulnerable households to social services. Employment is another vector for activating human capital. It is important to continue efforts to equip the workforce with skills that match changing labor demand and job matching interventions. A range of mechanisms, including online job portals, can link job seekers with employers in high productivity sectors.

The report follows the story of a hypothetical family, the Harutyunyans, whose health, learning and employment outcomes improve dramatically with the implementation of catalytic investments in human capital. It shows that if Armenia provided comprehensive education and health care, the long-term gross domestic product per capita could be 1.75 times what it is today. Armenia is one of the first to adopt the Human Capital Project, an indication of the strong political will to rise to the challenge.

Q. The World Bank has partnered with Armenia on historic reforms since independence. How do you see the commitment evolving in the coming years?

The report provides a starting point for developing, planning and funding an intersectoral program to harness human capital. The World Bank Group remains committed to providing technical and financial support to operationalize and implement this ambitious strategy. We highlight below important areas of engagement in education, health, social protection and employment.

Education: The lesson Education Improvement Project (EIP) supports government efforts to create a network of actors to accelerate knowledge creation and innovation; teach students relevant professional skills; and remove barriers to labor market participation, through increased access to early childhood education and care in rural areas to support working mothers.

A European Union-funded project (EU4Innovation Project) which is implemented with support from the World Bank contributes to government efforts to develop and pilot modern educational approaches, with the potential to be scaled up if successful. The project will also help identify cost-effective interventions to remove bottlenecks that prevent students from enrolling and doing well in STEM (science, technology, engineering, and math) subjects.

Health: The World Bank Group’s commitment to health dates back to 1997, with the Health Financing and Primary Health Care Development Project. The lesson Disease Prevention and Control Project (DPCP) supports the government’s efforts to strengthen the prevention, early detection and management of certain noncommunicable diseases at the primary health care level and to increase the efficiency and quality of certain hospitals.

The DPCP is also facilitating the emergency purchase of equipment and supplies for case management, as part of the COVID-19 response. Officials at the highest levels of the Armenian government recognize the urgent need for investments in health services to improve quality and ensure that every citizen has access to essential health care.

To this end, the World Bank Group has worked closely with its counterparts to engage on policy issues and provide technical support in areas such as reforms aimed at improving purchasing decisions and management. finance, strengthen primary health care, ensure integration between primary and specialized care, and inform efforts to expand fiscal space for health. This support can inform the next generation of reforms in Armenia, a country seen as an innovator in health reform among the former Soviet republics.

Social protection and work: The lesson Social Protection and Administration Project (SPAP II) supports the government’s efforts to create integrated service centers; develop monitoring and evaluation systems to administer social protection programs; and establish a unified information system to facilitate program management, monitoring, and evidence-based decision and policy making.

Through the Japan Social Development Fund, the World Bank Group is working with the government to improve Armenia’s social case management methodology and operational procedures. It also provides small business grants to poor and vulnerable people to facilitate their exit from public support and self-reliance.

Ongoing technical assistance and political dialogue will continue to support better targeting of social assistance; the digitization of social protection payment systems; and policies to support the labor market integration of return migrants, women and other vulnerable groups.

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