Abstract:Some industries exhibit external economies of scale. In these cases,the introduction of self-financing tax subsidy programmes canimprove social welfare. This paper advocates intervention incompetitive markets if economies of scale existand implementing the policy is inexpensive.
“…The strong impact of contiguity on industrialization may also stress the importance of local features such as localized knowledge spillovers, local cultures, habits or tastes. This is in agreement with results of Garcia‐del‐Barrio (), who argued that there are external economies of scale that provide an atmosphere of cross‐pollination of ideas so that firms learn from each other and through competition to generate efficiency in production.…”
Section: Estimation Results and Discussionsupporting
This paper seeks to establish the contribution of the Common Market for Eastern and Southern Africa (COMESA) programmes in promoting industrialization. It further seeks to establish the link between industrialization and productivity. The paper uses a gravity model to estimate a cross-sectional time-series (panel) dataset for the period 2001-2015.The results indicate that membership to COMESA has created large markets and promoted industrialization among member states. However, results also confirm that COMESA member states still heavily trade in industrial intermediates with nonmembers. The study further reveals that the share of foreign total factor productivity (TFP) to COMESA's TFP are weaker than expected, which suggests non-convergence to international knowledge spillovers. The study concludes that COMESA programmes have positively affected industrialization. We therefore recommend that COMESA should continue implementing strategies, policies and programmes that promote industrialization and technology transfer.
“…The strong impact of contiguity on industrialization may also stress the importance of local features such as localized knowledge spillovers, local cultures, habits or tastes. This is in agreement with results of Garcia‐del‐Barrio (), who argued that there are external economies of scale that provide an atmosphere of cross‐pollination of ideas so that firms learn from each other and through competition to generate efficiency in production.…”
Section: Estimation Results and Discussionsupporting
This paper seeks to establish the contribution of the Common Market for Eastern and Southern Africa (COMESA) programmes in promoting industrialization. It further seeks to establish the link between industrialization and productivity. The paper uses a gravity model to estimate a cross-sectional time-series (panel) dataset for the period 2001-2015.The results indicate that membership to COMESA has created large markets and promoted industrialization among member states. However, results also confirm that COMESA member states still heavily trade in industrial intermediates with nonmembers. The study further reveals that the share of foreign total factor productivity (TFP) to COMESA's TFP are weaker than expected, which suggests non-convergence to international knowledge spillovers. The study concludes that COMESA programmes have positively affected industrialization. We therefore recommend that COMESA should continue implementing strategies, policies and programmes that promote industrialization and technology transfer.
“…It appears unsuited to high-production-volume industries, such as commodity chemicals and the automotive industry. However, vaccine production, already suboptimal for economies of scale [ 10 ], needs a different model, and distributed manufacturing is a good fit. Scaled-Down Manufacture and Supply Chain Close to Points of Care Although revenues from vaccine sales are higher in developed countries, greater volume of sales occur in low- and middle-income countries.…”
Section: Distributed Manufacturing a More-sustainable Vaccine Modelmentioning
confidence: 99%
“…It appears unsuited to high-production-volume industries, such as commodity chemicals and the automotive industry. However, vaccine production, already suboptimal for economies of scale [10], needs a different model, and distributed manufacturing is a good fit.…”
The vaccines industry has not changed appreciably in decades regarding technology, and has struggled to remain viable, with large companies withdrawing from production. Meanwhile, there has been no let-up in outbreaks of viral disease, at a time when the biopharmaceuticals industry is discussing downsizing. The distributed manufacturing model aligns well with this, and the advent of synthetic biology promises much in terms of vaccine design. Biofoundries separate design from manufacturing, a hallmark of modern engineering. Once designed in a biofoundry, digital code can be transferred to a small-scale manufacturing facility close to the point of care, rather than physically transferring cold-chain-dependent vaccine. Thus, biofoundries and distributed manufacturing have the potential to open up a new era of biomanufacturing, one based on digital biology and information systems. This seems a better model for tackling future outbreaks and pandemics.
The Vaccine Production Model Needs to ChangeThe COVID-19 crisis has cast the vaccines industry into scrutiny [1]; an industry that has been silently beleaguered for decades (https://www.who.int/immunization/programmes_systems/ procurement/mi4a/platform/module2/2019_Global_Vaccine_Market_Report.pdf?ua=1). A United States National Academy of Sciences study from 2003 [2] concluded that the amount that the nation spent on vaccines 'appears to be insignificant compared with that spent on other medical and social interventions that may have lesser social benefits.' Large company numbers that supply vaccines have steadily reduced [3]: some 80% of vaccines arise from five multinationals (https://www.who.int/immunization/programmes_systems/procurement/market/ global_supply/en/). At the heart of the problem is a tension between relatively poor financial returns to the vaccine industry and the high costs in production and R&D [4].Compared to small molecule pharmaceuticals, centralised vaccine production facilities are capital intensive [5]. Fixed costs are high [6], especially for new vaccines. For example, the need for eggs for production is at least 70 years old, is expensive and time-consuming, but difficult to replace [7]. In past high-income countries have paid a higher price until the fixed costs are amortised. Then lower-income countries have adopted vaccines as the price has dropped after paying the fixed costs. However, there is now tremendous pressure for a COVID-19 vaccine to be available for all who need it, effectively everyone.
Distributed Manufacturing, a More-Sustainable Vaccine ModelThe long distribution chains of centralised vaccine production are patchy, resulting in incomplete geographical coverage [8] (Box 1). Even if there is no overall shortage, there may be where they are needed most. Centralisation of labour and production has been the norm in many industries, but in 2015 the World Economic Forum (WEF, see Glossary) put distributed manufacturing in its top ten emerging technologies for the year (https://www.weforum.org/agenda/2015/03/top-
HighlightsBiofoun...
Economic theory has proved that income redistribution in imperfectly competitive markets can increase social welfare and lead to Pareto-improving situations. This paper shows that, under certain assumptions, self-financing tax subsidy schemes can have Pareto-improving effects also in a competitive framework. This result is achieved by exploiting external economies of scale, resulting in a decrease in price along with an increase in output. The case of the vaccines industry and World Health Organization initiatives are examined to illustrate the theoretical analysis.
KeywordsExternal economies of scale • Income transfer redistribution • Pareto-improving tax-subsidies • Vaccines industry JEL Classification D31 • D64 • H2 • L13
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