Journal of Economic Perspectives-Volume 16, Number 4-Fall 2002-Pages 67-90
Pharmaceuticals and the Developing World
Pharmaceuticals have brought tremendous health benefits to developing countries, but existing pharmaceuticals are often underused or misused, and pharmaceutical R&D on health problems specific to poor countries is woefully inadequate.
The role of pharmaceuticals and medical technology in improving health in developing countries stands in contrast to the historical experience of the developed countries. Historically, health in currently developed countries improved largely due to higher incomes and consequent improvements in nutrition, sanitation and water supplies. Fogel (1986) finds that half of the decline in standardized British death rates and 70 percent of the decline in standardized American death rates between 1700 and 1980 occurred before 1911, in an era with few effective medicines. However, modern medical technologies allow tremendous improvements in health even at low income levels. The outward shift of the technological frontier is illustrated by Vietnam, which has a life expectancy of 69 years despite a per capita income that according to official statistics is less than one-tenth that of the United States in 1900, which had a 47-year life expectancy. 1 To take another example, per capita GDP in low-income sub-Saharan Mrican nations decreased 13 percent from 1972 through 1992, but life expectancy increased by 10 percent,
Data are from Balke and Gordon (1989),Johnston and Williamson (2002), Kurian (1994) and World Bank (200lb). Even if GDP growth in the United States were underestimated by two percentage points annually, 1900 U.S. per capita GOP exceeds Vietnam's current per capita GOP.
• Michael Kremer is Professor ofEconomics, Harvard University, Cambridge, Massachusetts, Senior Fellow, The Brookings Institution, Washington, D. C., and Research Fellow, National Bureau of Economic Research, Cambridge,...