Drug quality and global trade
Amir Attaran, Roger Bate, Ginger Zhe Jin, Aparna Mathur 09 October 2014
There is a perception amongst pharmaceutical experts that some Indian manufacturers and/or their distributors segment the global medicine market into portions that are served by different quality medicines. This column finds that drug quality is poorer among Indian-labelled drugs purchased inside African countries than among those purchased inside India or middle-income countries. Substandard drugs – non-registered in Africa and containing insufficient amounts of the active ingredient – are the biggest driver of this quality difference.
Data from the Pharmaceutical Security Institute indicate that poor-quality medicines were found in 124 countries in 2011, with the problem more severe in low- and mid-income countries than in developed countries (IOM 2013). While much attention has been focused on intellectual property rights protection (notably issues surrounding the WTO’s TRIPS1 agreement), poor-quality samples were more prevalent in cheap, generic drugs than in expensive, innovator-branded drugs when we tested drug samples from 18 low-to-mid-income countries (Bate et al. 2011).
Health economics International trade
pharmaceuticals, drugs, medicine, health, trade, drug quality, India, Africa, counterfeiting, regulation, market segmentation
Political reservations and women’s entrepreneurship in India
Ejaz Ghani, William Kerr, Stephen D O'Connell 02 October 2014
Numerous countries have implemented seat reservations for women in politics over the past decades. Starting in the early 1990s, India’s flagship decentralisation reform instituted one-third seat reservations for women in local governance bodies. This column suggests that this political empowerment increased women’s economic empowerment through at least one channel, i.e. small-scale entrepreneurship. These findings suggest that political empowerment policies for women may additionally have beneficial economic effects in the longer run.
India’s 73rd Constitutional Amendment Act, passed in 1992, encompassed a set of reforms implementing a nationally-standardised and decentralised system of local government. These reforms, also known as the Panchayati Raj, importantly required a one-third seat reservation for women among local governance bodies. A large body of research has shown distinct effects of including women in the political sphere in India, e.g.
India, entrepreneurship, firms
Three new leaders face the challenge of food and fuel subsidies: Sisi, Modi, and Jokowi
Jeffrey Frankel 09 September 2014
Subsidies for food and energy are economically inefficient, but can often be politically popular. This column discusses the efforts by new leaders in Egypt, Indonesia, and India to cut unaffordable subsidies. Cutting subsidies now may even be the politically savvy choice if the alternative is shortages and an even more painful rise in the retail price in future. Ironically, it is India’s new Prime Minister Modi – elected with a large electoral mandate and much hype about market reforms – who is already shrinking from the challenge.
In few policy areas does good economics conflict so dramatically with good politics as in the practice of subsidies to food and energy. Economics textbooks explain that these subsidies are lose-lose policies. In the political world, that can sound like an ivory tower abstraction. But the issue of unaffordable subsidies happens to be front and centre politically this summer, in a number of places around the world. Three major new leaders in particular are facing this challenge: Sisi in Egypt, Jokowi in Indonesia, and Modi in India.
Development Energy Politics and economics Poverty and income inequality
subsidies, fuel subsidies, food subsidies, Agriculture, energy, Egypt, Indonesia, India, Poverty, environment, trade, WTO, Doha Round, Bali
How retail drug markets in poor countries develop
Daniel Bennett, Wes Yin 14 August 2014
Many drugs sold in poor countries are counterfeit or substandard, endangering patients’ health and fostering drug resistance. Since drug quality is difficult to observe, pharmacies in weakly regulated markets may have little incentive to improve quality. However, larger markets allow firms to reorganise production and invest in technologies that reduce the marginal cost of quality. This column discusses how the entry of a new pharmacy chain in India led incumbents to both cut prices and raise drug quality.
Millions of people die each year from infectious diseases like malaria, TB, HIV, and diarrhoea, many of which have drug therapies. We need effective medicine to confront the alarming burden of infectious disease in the developing world. However, many of the drugs for sale in developing countries are of poor quality. Counterfeiters sell ineffective products that imitate the appearance of established brands, while small manufacturers make and distribute substandard versions of common generics.
Development Health economics Industrial organisation
competition, pharmaceuticals, India, quality, asymmetric information, economies of scale, healthcare, adverse selection, drugs, medicine, market for lemons, chains
Growing through cities in India
Ejaz Ghani, William Kerr, Ishani Tewari 11 July 2014
Some cities grow through specialisation others through diversity. This column measures specialisation and diversity for the manufacturing and services sectors in India. It finds that Indian districts with a broader set of industries exhibit greater employment growth. This is particularly true for low population densities, rural areas and unorganised sector, reflecting knowledge flow and the inclusive nature of employment growth due to diversity.
Urbanisation and development are tightly linked (Duranton and Puga 2013). Developing countries are urbanising at a much faster pace than developed countries. For instance, China’s and India’s economic transformation and urbanisation is happening at 100 times the scale of the first country in the world to urbanise – the UK – and in just one-tenth of the time.
growth, India, urbanisation
India – igniting inclusive growth by raising female economic participation
Piritta Sorsa 18 June 2014
Female labour market participation in India is lower than in other emerging markets. This column discusses the dynamics and causes of this issue. Many women have dropped out of the labour market in the recent years, or work in low-paying jobs without social benefits and with large wage differentials. Raising female labour force participation could boost economic growth up to 2.4% with a package of pro-growth and pro-women policies.
India is in many ways at a crossroads in mid-2014. It will have a new government, it will need ignition to restart the growth engine and make it more inclusive. But if this is to happen, then Indian women will have to be given the chance and the incentives to participate more in the labour market. Indian women already show signs of starting gradually to assert themselves more. Currently, female labour force participation is among the lowest in the emerging markets and declining.
Gender Labour markets
India, gender gap, female labour market participation
Job protection reform in India
Sean Dougherty, Veronica Frisancho, Kala Krishna 08 May 2014
Recent supreme court action has reintroduced labour reform into India’s public debate. This column estimates productivity effects of deregulation exploiting state-level variation in policy and plant-level data. Even modest deregulation has improved total factor productivity substantially; this sets the scene for a deep liberalising reform
India has some of the more restrictive labour laws in the world, but a large informal sector to which these do not apply. Therefore, firms thinking of growing in size and becoming formal must trade off the advantages of size with the disadvantages of facing regulations. This dilemma keeps Indian firms small and informal unless they have a lot to gain by growing, i.e. when they are very good indeed.
India, labour market reform
What voters reward: Evidence from the 2009 Indian parliamentary elections
Poonam Gupta, Arvind Panagariya 17 March 2014
Do voters care about economic outcomes? Evidence on this question, especially in the context of developing countries, is rather scant. This column reports the findings from analysis of the 2009 parliamentary elections in India. Voters favoured parties that delivered high growth in their states and rejected those that did not. The authors also find that voters preferred candidates who had served in the parliament before, were wealthy, educated, and affiliated with a large party.
Despite the intuitive appeal of the idea that good economic outcomes such as sustained rapid growth should help incumbents win elections, evidence on it has been scant, especially from developing countries. In one notable exception, Brender and Drazen (2008) use a comprehensive cross-country dataset spanning over 74 developed and developing democratic countries and 350 election episodes to examine whether GDP growth during the term in office or in the election year helps incumbents win elections.
Politics and economics
democracy, India, voting
Free lunch? Effect of India’s food subsidy programme on nutrition
Neeraj Kaushal, Felix Muchomba 24 December 2013
A recent food security bill passed by the Indian government has raised criticism due to its high cost but questionable effect on nutrition. This column presents a recent study that finds the food subsidies did not improve nutrition, but affected food consumption patterns. In particular, consumption of subsidised grains increased, and consumption of some cheaper and inferior substitutes decreased.
In September the Indian government passed a food security bill guaranteeing 75% of the country’s rural population and 50% of its urban population 5 kilograms of food grain per person per month at heavily subsidised prices (Parliament of India 2013). The bill, projected to cost 3% of the nation’s GDP in the first year of its implementation, has faced criticism as it expands the Targeted Public Distribution System (TPDS) - India’s existing food subsidy programme that is well known for administrative inefficiencies, corruption, and wastage (Bhalla 2013, Shiva 2013).
Development Poverty and income inequality
India, nutrition, food subsidy
Policymaking in crises: Pick your poison
Kristin Forbes, Michael W Klein 24 December 2013
Government interventions to control capital flows and reduce exchange-rate volatility have long been controversial. The Global Financial Crisis has made the debate more urgent. This column discusses recent research that evaluates such policies against the counterfactual of no intervention. Depreciations and reserve sales can boost GDP growth during crises, but may also substantially increase inflation. Large increases in interest rates and new capital controls are associated with reductions in GDP growth, with no significant effect on inflation. When faced with sudden shifts in capital flows, policymakers must ‘pick their poison’.
In 2010, the Brazilian finance minister Guido Mantenga declared a ‘currency war’ because of the harmful effects of the strengthening of the real. He blamed the currency’s appreciation on easy money in advanced countries, and to a lesser extent on reserve accumulation in some emerging markets. More recently, concerns were raised by slides in the values of the Indian rupee – which lost 18% of its value against the dollar between February and August – and by the fall in the value of the Indonesian rupiah – which has lost almost a quarter of its value against the US dollar in 2013.
Exchange rates Macroeconomic policy
exchange rates, foreign exchange reserves, India, Indonesia, global financial crisis, capital controls, Brazil, currency war