COVID-19: Insights from innovation economists
George Abi Younes, Charles Ayoubi, Omar Ballester, Gabriele Cristelli, Gaétan de Rassenfosse, Dominique Foray, Patrick Gaulé, Gabriele Pellegrino, Matthias van den Heuvel, Elizabeth Webster, Ling Zhou
Science and Public Policy (2020), 47(5): 733-745
Research Question
What economic insights can innovation economists provide regarding the COVID-19 pandemic?
Why Do We Care
The COVID-19 pandemic exposed vulnerabilities in the Science, Technology, and Innovation (STI) ecosystem, highlighting the implications of underinvestment in critical research areas such as vaccine and drug development. Understanding these economic dynamics is essential for informing future policy interventions and ensuring preparedness for similar global health crises. Additionally, the pandemic has catalyzed innovative responses that can be leveraged for better health outcomes and economic resilience.
What Did We Do
We synthesized viewpoints from innovation economics to analyze the COVID-19 pandemic's implications for research and development (R&D) in a global context. We examined historical investment trends, market failures, and policy responses, emphasizing the importance of robust STI frameworks. We drew on existing empirical literature, government reports, and data from over 40 healthcare companies engaged in developing COVID-19 vaccines.
What Did We Find
We find that underinvestment in vaccine R&D results from both market failures and systemic issues in the STI ecosystem. A notable finding is that demand for vaccines typically decreases in non-crisis periods due to perceived low economic returns, limiting pharmaceutical companies' incentives to invest. We also suggest that public-private partnerships and new funding models could mitigate these failures, allowing for more rapid innovation and dissemination of medical technologies during future crises.
Primary Data
- Over 40 healthcare companies involved in COVID-19 vaccine development
- Government R&D funding data
- Existing empirical literature on STI ecosystem dynamics
Assumptions
- Market failures exist regarding the incentives for vaccine R&D, leading to underinvestment
- Public funding can effectively stimulate vaccine R&D by addressing market failures
- Demand for vaccines can be significantly influenced by the perception of their economic returns during non-crisis periods