For COVID vaccines, developing countries may be left behind
Developing countries are at risk of being left behind as Covid inoculations begin
LONDON >> The end of the pandemic is finally in view. So is rescue from the most traumatic global economic catastrophe since the Great Depression. As COVID vaccines enter the bloodstream, recovery has become reality.
But the benefits will be far from equally apportioned. Wealthy nations in Europe and North America have secured the bulk of limited stocks of vaccines, positioning themselves for starkly improved economic fortunes. Developing countries — home to most of humanity — are left to secure their own doses.
The lopsided distribution of vaccines appears certain to worsen a defining economic reality: The world that emerges from this terrifying chapter in history will be more unequal than ever. Poor countries will continue to be ravaged by the pandemic, forcing them to expend meager resources that are already stretched by growing debts to lenders in the United States, Europe and China.
The global economy has long been cleaved by profound disparities in wealth, education and access to vital elements like clean water, electricity and the internet. The pandemic has trained its death and destruction of livelihood on ethnic minorities, women and lower-income households. The ending is likely to add another division that could shape economic life for years, separating countries with access to vaccines from those without.
“It’s clear that developing countries, and especially poorer developing countries, are going to be excluded for some time,” said Richard Kozul-Wright, director of the division of globalization and development strategies at the United Nations Conference on Trade and Development in Geneva. “Despite the understanding that vaccines need to be seen as a global good, the provision remains largely under control of large pharmaceutical companies in the advanced economies.”
International aid organizations, philanthropists and wealthy nations have coalesced around a promise to ensure that all countries gain the tools needed to fight the pandemic, like protective gear for medical teams as well as tests, therapeutics
and vaccines. But they have failed to back their assurances with enough money.
The leading initiative, the Act-Accelerator Partnership an undertaking of the World Health Organization and the Bill and Melinda Gates Foundation, among others has secured less than $5 billion of a targeted $38 billion.
A group of developing countries led by India and South Africa sought to increase the supply of vaccines by manufacturing their own, ideally in partnership with the pharmaceutical companies that have produced the leading versions.
In a bid to secure leverage, the group has proposed that the World Trade Organization waive traditional protections on intellectual property, allowing poor countries to make affordable versions of the vaccines.
The WTO operates on consensus. The proposal has been blocked by the United States, Britain and the European Union, where pharmaceutical companies wield political influence. The industry argues that patent protections and the profits they derive are a re
quirement for the innovation that yields lifesaving medicines.
Proponents of suspending patents note that many blockbuster drugs are brought to market via government-financed research, arguing that this creates an imperative to place social good at the heart of policy.
“The question is really, ‘Is this a time to profit?’” said Mustaqeem De Gama, councilor at the South African mission to the WTO in Geneva. “We have seen governments closing down economies, limiting freedoms yet intellectual property is seen to be so sacrosanct that this cannot be touched.”
In the wealthy nations that have secured access to vaccines, relief from the economic disaster brought on by the public health emergency is underway.
The restrictions that have shut down businesses could be lifted, bringing meaningful economic benefits as soon as March or April.
For the moment, the picture is bleak. The United States, the world’s largest economy, has suffered death tolls equivalent to a 9/11 every day, making a return to normalcy appear distant. Major economies like Britain, France and Germany are under fresh lockdowns as the virus maintains momentum.
But after contracting 4.2% this year, the global economy appears set to expand by 5.2% next year, according to Oxford Economics. That forecast assumes annual growth of 4.2% in the United States and a 7.8% expansion in China, the world’s second-largest economy, where government action has controlled the virus.
Europe will remain a laggard, given the prevalence of the virus, according to IHS Markit, with the continent’s economy not returning to its precrisis size for two years. But a deal struck between Britain and the European Union on Thursday, preserving much of their trading relationship after Brexit, has eased the worst fears about a slowdown in regional commerce.
But by 2025, the longterm economic damage from the pandemic will be twice as severe in so-called emerging markets compared with wealthy countries, according to Oxford Economics.
Many economists assume that as the vaccines ease fear, people will surge toward experiences that have been off-limits, thronging restaurants, sporting events and holiday destinations. Households have saved up as they have canceled vacations and entertained themselves at home.
“If people’s spirits are eased, and some of the restrictions are lifted, you could see a spending splurge,” said Ben May, a global economist at Oxford Economics in London. “A lot of this will be about the speed and degree to which people go back to more normal behaviors. That’s very hard to know.”
But many developing countries will find themselves effectively inhabiting a different planet.
The United States has secured claims on as many as 1.5 billion doses of vaccine, while the European Union has locked up nearly 2 billion doses enough to vaccinate all of their citizens and then some. Many poor countries could be left waiting until 2024 to fully vaccinate their populations.
High debt burdens limit the ability of many poor countries to pay for vaccines. Private creditors have declined to take part in a debt suspension initiative championed by the Group of 20.
Promised aid from the World Bank and the International Monetary Fund has proved disappointing. At the IMF, the Trump administration has opposed an expansion of so- called special drawing rights the basic currency of the institution depriving poor countries of additional resources.