Trade Therapy: Deepening Cooperation to Strengthen Pandemic Defenses
Such services include cancer, orthopedic, cardiovascular, dental, n eurological, and cosmetic treatment. Large economies of scale mean that countries with larger domestic markets are also major exporters (figure 1.1). A larger domestic market provides greater incentive to innovate and an opportunity to reduce costs. As a result, production of many medical products is concentrated in larger economies such as China, India, many European countries, and the United States. A salient example of this so-called home market effect for medical goods is famotidine (known as Pepcid® in the United States), which is used to treat peptic ulcers and Figure 1.1 The largest economies, not always high-income economies, are the largest exporters of medical goods and services, leading to concentration 100,000 Exports of medical goods and services (US$, millions, log scale)
16
Germany
United States China India
10,000
Netherlands
1,000
Saudi Arabia Eswatini
100
10
1
Nigeria
10
100
1,000
10,000
GDP (US$, billions, log scale) All economies
High-income economies
Sources: United Nations COMTRADE data; World Trade Organization’s Trade in Services Data by Mode of Supply (TISMOS) dataset; World Development Indicators database. Note: Data from 2019 are used to avoid capturing impacts of the COVID-19 pandemic on certain variables. Medical goods include pharmaceuticals, medical equipment, orthopedic equipment, personal protective equipment, and other consumable medical supplies. Medical services are those delivered through all General Agreement on Trade in Services (GATS) modes: (1) cross-border supply, (2) consumption abroad, (3) commercial presence, and (4) presence of natural persons. “High-income economies” are as classified by the World Bank in 2000, with gross national income (GNI) per capita of US$12,535.
