Health Equity: Implications for Developing and Developed Countries

It is simple and straightforward to make the moral argument that advanced economies should be providing vaccines and support to developing economies. What is more complex, is choosing the correct method of doing so, and demonstrating the positive economic impacts globally. The work of both Professor Sebnem Kalemli-Ozcan and Professor Kamalini Ramdas has aimed to uncover the answers to these two questions. In conversation with Professor Elias Papaioannou, they discuss the factors involved in the concept of health equity, and what it means for the future of our global society.

The economic perspective and global impact

It is appropriate to start by mentioning the consequential paper, written by Professor Kalemli-Ozcan and her peers: The Economic Case for Global Vaccinations: An Epidemiological Model with International Production Networks. Professor Papaioannou uses the paper as the basis for discussion around the relationship between advanced economies and developing ones, especially during a global health crisis. It is widely known that there is a substantial gap between the vaccination rates of advanced and developing economies, but little has been previously shown that quantifies the consequences, let alone a dollar figure.

“Using both [ethical and economic lens] together is going to help in reducing inequality and bring out the maximum economic gain,” Professor Sebnem Kalemli-Ozcan.

Professor Kalemli-Ozcan is quick to point out that every country is interconnected, not only through trade, but through the flow of human capital and labour. Her central premise is that one country cannot return to pre-pandemic levels without the success of others – such is the nature of our globalized world.

She also highlights that because the COVID-19 pandemic produced both a demand and supply shock, the effects of lagging emerging and developing economies will be felt disproportionately across the rich world. Both country size, in GDP, and geographic location play an important role in determining the impact of global vaccination levels on a developed country’s economic recovery. Countries like the United States and Germany, who are heavily reliant upon suppliers and manufacturers, are especially susceptible. Breaking down the flows of trade, capital and labour in a different manner, into industries, it is clear which are the most susceptible to working restrictions imposed to halt the spread of the virus. A perfect example of this is the US car manufacturers being reliant on microchips from developing countries, resulting in hindered production. In her research, Professor Kalemli-Ozcan mentions that wholesale and retail, transport, storage, agriculture and fish are three areas that have been impacted the most severely across all economies and are therefore key indicators of the progress of the recovery.

Professor Kalemli-Ozcan’s modelling has shown that through ‘amplification’, the effect of global trade networks (including the imports of supplies, as opposed to only the exports), the cost of not working to vaccinate emerging and developing countries could be upwards of $3.7 trillion, a staggering 49% of which would be shouldered by advanced economies.

The health perspective and the importance of testing

The economic impact naturally leads to a conversation about solutions. As wealthy countries around the world gear up for comprehensive vaccination plans, there are number of obstacles facing emerging countries. Whether it be cost, supply, logistics or trust in the vaccines, the path to global recovery will depend on the success achieved in the developing world. Professor Kamalini Ramdas’s recent work related to COVID-19 has centred on how to lower the cost and mitigate supply shortages in healthcare.

“Health equity is achieved by offering equal or better quality at much lower cost,” Professor Kamalini Ramdas.

The insight she offers is through the lens of testing. This is because vaccine rollout will take time, regardless of the country, and a comprehensive testing regime will provide a strong basis to mitigate the spread and most effectively begin vaccinations. With COVID-19, and other similar viruses, testing has been a trade-off between expensive, slow, and accurate as opposed to cheap, quick, and inaccurate. This is obviously problematic, but a simple fix could be applied to streamline the cost and time incurred. By using multiple inexpensive and fast testing kits, the chance of errors is reduced. When considering the two aspects affecting the success of a COVID-19 test, accuracy, and sensitivity, both are improved the more tests you take. As an example, if an inexpensive test is $10, and an expensive one is $100, you could achieve a similar level of accuracy using three inexpensive tests saving time and $70.

The impact of this is beyond the dollar figure attached to the tests, however. The expensive testing often requires the sample to be sent back to a laboratory to be analysed. This is not required for cheaper tests. The lab requirement makes testing in remote communities, and other parts of emerging economies especially difficult and time consuming.

“This idea [multiple testing method] can have profound implications for how we are doing testing,” Professor Kamalini Ramdas.

A second method of mitigating supply and cost obstacles highlighted by Professor Ramdas is pooling. This works exactly how it sounds, through grouping several patients and testing them together. If the test comes back negative, everybody is free to go, if the test comes back positive, the health officials move on to testing everybody individually as they normally would. The impact of time saved (both for receiving the results and the healthcare workers) and cost could be massive. However, Professor Ramdas is quick to point out this is not a replacement for the multiple testing method described above, but rather a compliment. Working in tandem, these solutions could drive significant savings across developing economies, and therefore work to streamline the pandemic recovery.

“All approaches need to be used hand in hand [including] vaccination, testing, and care delivery,” Professor Kamalini Ramdas.

There is more to the pooling method than its potential application during the pandemic, however. It is an effective method for tackling a whole host of health crises and general medical concerns. Additionally, as the usage of telemedicine has been accelerated through the pandemic, pooling can be used to optimize transfers of information and improve the services rendered. Privacy is the only major concern behind the application of such a strategy. Tolerance to receiving medical attention in groups is a factor that will have to be measured and accounted for moving forward. During a crisis, at the very least, when knowledge and service take priority, this is an excellent tool to have at the disposal of healthcare professionals. 

We are all in this together

The economic benefits, moral obligations and practical solutions to common obstacles come together to provide a convincing argument for a swift and deliberate campaign to support vaccination in emerging and developing economies. What is clear, more so than ever before, is that it is not enough to succeed domestically; your neighbours, allies and trading partners must also weather and thrive as we turn the corner on this global health crisis.

“Globalization might have amplified the pandemic, of course we are talking about a virus that spreads through travelling, but globalization is also the only solution… we are all in this together,” Professor Sebnem Kalemli-Ozcan.

Sebnem Kalemli-Ozcan is the Neil Moskowitz Professor of Economics at the University of Maryland, Research Associate at the National Bureau of Economic Research (NBER) and a Research Fellow at the Center for Economic Policy Research (CEPR). Sebnem is a former senior policy adviser at the International Monetary Fund and has published extensively in the areas of international finance, international development and applied growth theory. She is the co-author of a recent report launched by the World Health Organization: “The Economic Case for Global Vaccinations: An Epidemiological Model with International Production Networks”

Kamalini Ramdas is Professor of Management Science and Operations and Deloitte Chair in Innovation and Entrepreneurship at London Business School. Her current research examines new ways to create value through innovation, including: service innovation, operational innovation and business model innovation. She has also examined the amount of product variety and component-level variety that firms should offer, and how variety can be managed effectively through design. Recently, Kamalini was the co-author of an article published in Nature Medicine, Patients could share virtual medical appointments for better access to telemedicine, with Dr. Soumya Swaminathan, Chief Scientist at the World Health Organization.

Elias Papaioannou is co-academic director of the Wheeler Institute and Professor of Economics at London Business School, focusing on international finance, political economy, applied econometrics, growth, and development. In the academic year 2019/2020, Elias held the Varian Visiting Professor of Economics at the MIT Department of Economics.

Zachary Day (MBA2021) is the Co-President of the Military in Business club at London Business School. Prior to his studies, he was an officer in the Canadian Armed Forces where he served in various operational and strategic roles from 2015-2019. Zachary is an intern for the Wheeler Institute, contributing to the creation of content that amplifies the role of business in improving lives.

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