Economic Case For Global Vaccination

Question 1

Problem of economic recovery

Answer 1

Moral case for funding global vaccination, but an economic case?

Rich advanced economies have been vaccinated and experienced economic recovery

However other places will take years before majority receive vaccine.

Question 2

So there is a moral case but an economic case?

3 questions on whether there is an economic case for global vaccination.

Answer 2

Does inequality in vaccine distribution affect economy recovery in advanced economies?

Who will vaccinate developing world? (COVAX is $7bn short, 18bn req)

Should advanced economies subsidies vaccination in emerging economies? (We know AE’s and EMDE interact through trade a lot…)

Question 3

What sectors are affected most (2).

Consider INTERNATIONAL and INTER-SECTORAL trade linkages and the subsequent effect of vaccine statuses. AE and EMDE interact closely…

e.g supply chain of a laptop is EVERYWHERE

Answer 3

Industries with more imported imputs.
Industries with more in-person contacts

So industries are more exposed if imported imputs are from unvaccinated trade parters.

(Remember Africa is most unvaccinated continent, so industries importing from Africa would be affected a lot…)

Question 4

Total value of world trade in 2020 OECD, and how much does intermediate products trade contribute?

and what does this highlight?

Answer 4

$18tn

10.6tn is trade of intermediate products (60% of world trade in 2015)

Highlights importance of international and inter-sectoral trade linkages. (So AE and EMDE’s interact closely)

Question 5

Short run impacts of supply from COVID-19, supporting case for global vaccination.

Answer 5

Labour supply falls from infected workers or lockdown.

Even if fine domestically, decreased labour force in country’s trade partners cause reduced intermediate inputs (so do not have resources for supply as partners are struggling)

so ultimately supply output falls too

Question 6

Short run impacts of demand from COVID-19, supporting case for global vaccination (2)

Which sector most affected?

Answer 6

Fear of infection encouraged voluntary social distancing, affecting sectors requiring close contact.

Uncertainty on duration and the economy created affects expenditure (Y)

Question 7

4 Vaccination and lockdown scenarios to determine case for global vaccination or not

Answer 7

Immediate vaccinations> No covid

Fast vaccinations- universal in AES by early 2021

Slow vaccinations- 50% of population in emerging by end of 2021

Endogenous lockdowns- determined by ICU capacities of countries>14 days

Question 8

Scenario 1: Result of immediate vaccination only in AES and no lockdown in EMDEs

Does this provide a case for global vaccination?

Answer 8

Reduction in GDP for both

Severe for EMDEs, no lockdown=more infection so severe

AEs still suffer as a result of international trade linkages with the EMDEs, lose around 1% GDP (export less to EMDEs)

(this scenario dismisses the case for global vaccination)

Question 9

Result of fast vaccinations in AEs and slow in EMDEs and endogenous lockdowns (More realistic)

case for global vaccination?

Answer 9

Cost for AE is almost as high as EMDEs. Despite their fast rollouts ; AES Can bear up to 49% of global costs!

So this assumes there is an economic case for global vaccination.

Question 10

Now we have answers to the 3 questions
1.Does inequality in access to vaccines affect recovery of AE’S?

2. Who will/should vaccinate developing world?
3. Should AE’s subsidise vaccination in EMDE’s?

Answer 10

Yes- equitable acccess to vaccines can produce economic benefits for the global economy (interlinked, and the scenarios show so)

AEs have strong incentives to eliminate pandemics at trade partners in order to achieve a faster recovery at home (as they suffer indirectly still-49% of global costs in scenario 3!)

Should AEs subsidise vaccination in EDMEs? Yes

So there is an economic incentive and a moral. “No economy fully recovers until every economy recovers”