Can redistribution of vaccine improve global welfare? Lessons from COVID-19

Gunjan Kumari and Oindrila Dey ()
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Gunjan Kumari: Indian Institute of Foreign Trade
Oindrila Dey: Indian Institute of Foreign Trade

The European Journal of Health Economics, 2024, vol. 25, issue 7, No 9, 1217-1238

Abstract: Abstract The disparity in the distribution of COVID-19 vaccine has been recorded with more than 70% vaccination rate for high-income countries as compared to less than 40% for low-income countries. The low affordability of vaccines for the majority of low-income group invites the need for redistribution of vaccines. The disproportionate donation of vaccines across the globe motivates us to explore the incentive for the high-income group to redistribute. An exploratory analysis of cross-country COVID-19 vaccination distribution data shows that the countries which have received vaccines as donation has also contributed to vaccine wastage. This paper intends to provide a theoretical background for this counterintuitive observation using welfare analysis. We find that the market mechanism leads to a negative impact on global welfare due to redistribution. Only an invention with a defined redistribution mechanism may ensure an increase in global welfare. It is found that a critical value of redistribution mechanism reinforced by a minimum threshold level of income is essential to enhance welfare. The reduced form from the theoretical predictions is empirically validated with cross-country data on COVID-19 vaccination for all countries. As identified in theory, the internal support variables like political stability, government effectiveness, and health expenditure at the country level will impact global welfare. Therefore, when global cooperation is essential during a health crisis like COVID-19, improved internal coordination and intentions cannot be ignored.

Keywords: Vaccine transfer; Redistribution; Health expenditure; Health inequality; Welfare impact (search for similar items in EconPapers)
JEL-codes: H51 I1 I11 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10198-023-01665-9

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