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How the pandemic highlighted the greatest benefit of globalisation – co-operation
The provision of Covid-19 vaccines has become a serious issue, not only in Sri Lanka, but in all parts of the world, but governments could have faced this issue better if they had understood the economics behind it – especially because it is the science of managing scarce resources by making the right choices in resource allocation.
Understanding this is much more important today because Covid-19 vaccines have become a limited and scarce resource globally. Sri Lankans who got the first jab of Oxford AstraZeneca vaccine are now in a stage of confusion, as they have lost the access to the second jab. This is mostly due to the unfortunate Covid uptick in India, which is globally the main manufacturer of vaccines.
Let’s rewind to about a year ago. This was when Sri Lanka managed the first wave of Covid-19, with a strict lockdown, active contact tracing, and effective quarantine mechanism. The number of infections and fatality cases in the USA, Italy, and some other European countries were very high during the same period. But things have changed.
Economically, this was the time Sri Lanka embraced self-sufficiency. Many argued that globalisation and global convergence have come to a standstill, and that we have to go for self-sufficiency, and even for a homemade recipe for Covid-19 pandemic management.
After one year, the entire world – and even the Sri Lankan authorities – has unanimously agreed that the best solution to manage the pandemic is vaccination. At one point, some policymakers even questioned and argued, saying: “Why are we making our people guinea pigs for vaccination testing of the products developed by other countries?” However in just one year it was proven that global co-operation is needed for us to prosper; and the main vaccines currently in use in Sri Lanka, namely Oxford AstraZeneca, the Russian-developed Sputnik V and Chinese-developed Sinopharm are the result of global co-operation.
The vaccines Sri Lanka received as a result of Covax are part of a global co-operation programme, where many countries and international donors contributed to develop the vaccines at a rapid pace. The US invested about $ 4 billion in Covax, as did the Bill and Melinda Gates Foundation. The Covax programme is a global mechanism, where countries and donors donate money to the programme, similar to the Paris agreement, for the vaccinations of middle and low-income countries.
However, it is true that as usual, the countries with deep pockets received an additional advantage of securing more doses than middle-income countries. It is a classic case of “higher the investment, higher the return”. In this case, the higher return is in the number of doses for countries that invested billions of dollars for vaccine development and manufacturing.
First world countries including Canada, USA, Japan, and the UK have made multiple bilateral deals with many pharmaceutical companies, and have managed to secure doses more than they require for the entire population. Those countries made the risk of investing in multiple companies in case of the failure of certain vaccines during the development process. As a result, some countries like Canada have now reserved enough vaccines to vaccinate 8.7 times the doses required by their population. The UK and USA have reserved vaccination doses for about 7.7 and 4.0 times the sizes of their population.
Globally, this has created a debate on the waiver of patent rights for vaccines. Some economists and policymakers have requested a waiving-off of these globally, so that the developing world will be able to produce its own vaccines – thereby increasing the supply of vaccines and bringing the pandemic to an end.
However, intellectual property (IP) rights is a big component of pharma manufacturing. Companies and scientists embraced taking such a significant risk because of the large returns they could have made. Requesting a waive-off on these IP rights may affect the incentive of developing similar high-demand pharma products in the long run.
In this context, the question is what Sri Lanka can do to accelerate the vaccination programme.
First, we have to realise we are already late to catch the train. The cost of the delay is a serious economic storm to an already-ailing economy. Ordering vaccines and rolling out vaccinations could have started about six to seven months before. However, what we can do now is to open up the vaccine rollout to the private sector. With the global agent agreements, private sector companies may be able to secure some doses, so those individuals who could afford a vaccine may be able to get it by paying a higher price.
Thereby, the most vulnerable sectors who can’t afford a vaccine could have access to the government programme. Big corporations and exporters in Sri Lanka most likely will pay the vaccinations for their employees. This is the same as PCR testing at the initial stage. Private sector was not allowed to conduct PCR testing. As a result, even someone who could afford a PCR test had to stretch out the resources of the Government, and as usual, it is the most influential people who got preference in the government system.
Most healthcare providers currently conduct PCR tests in collaboration with the private sector, which has helped immensely for active contact tracing and quarantining. The same actually happened for the vaccines as well. With the absence of a proper priority list, many who could afford to purchase a vaccine, and who could have survived without a vaccine for some time, got preference over someone who was deeply in need.
We also have to admit that global co-operation in the modern world is a normal thing, and depending on each other is not a weakness, but a strength.