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Epidemics & Economics PROGRAM ON THE GLOBAL DEMOGRAPHY OF AGING AT HARVARD UNIVERSITY Working Paper Series Epidemics & Economics David E. Bloom, Daniel Cadarette, and J.P. Sevilla June 2019 PGDA Working Paper No. 177 http://www.hsph.harvard.edu/pgda/working/ Research reported in this publication was supported in part by the National Institute on Aging of the National Institutes of Health under Award Number P30AG024409. The content is solely the responsibility of the authors and does not necessarily represent the official views of the National Institutes of Health. EPIDEMICS & ECONOMICS New and resurgent infectious diseases can have far-reaching economic repercussions David E. Bloom, Daniel Cadarette, and JP Sevilla nfectious diseases and associated mortality have Concern over the spread of even a relatively con- abated, but they remain a significant threat tained outbreak can lead to decreased trade. For throughout the world. We continue to fight example, a ban imposed by the European Union Iboth old pathogens, such as the plague, that have on exports of British beef lasted 10 years following troubled humanity for millennia and new pathogens, identification of a mad cow disease outbreak in such as human immunodeficiency virus (HIV), that the United Kingdom, despite relatively low trans- have mutated or spilled over from animal reservoirs. mission to humans. Travel and tourism to regions Some infectious diseases, such as tuberculosis affected by outbreaks are also likely to decline. Some and malaria, are endemic to many areas, imposing long-running epidemics, such as HIV and malaria, substantial but steady burdens. Others, such as deter foreign direct investment as well. influenza, fluctuate in pervasiveness and intensity, The economic risks of epidemics are not trivial. wreaking havoc in developing and developed econ- Victoria Fan, Dean Jamison, and Lawrence Summers omies alike when an outbreak (a sharp increase in recently estimated the expected yearly cost of pan- prevalence in a relatively limited area or population), demic influenza at roughly $500 billion (0.6 percent an epidemic (a sharp increase covering a larger area of global income), including both lost income and or population), or a pandemic (an epidemic covering the intrinsic cost of elevated mortality. Even when multiple countries or continents) occurs. the health impact of an outbreak is relatively limited, The health risks of outbreaks and epidemics— its economic consequences can quickly become and the fear and panic that accompany them—map magnified. Liberia, for example, saw GDP growth to various economic risks. decline 8 percentage points from 2013 to 2014 First, and perhaps most obviously, there are the during the recent Ebola outbreak in west Africa, costs to the health system, both public and private, even as the country’s overall death rate fell over of medical treatment of the infected and of out- the same period. break control. A sizable outbreak can overwhelm The consequences of outbreaks and epidemics are the health system, limiting the capacity to deal with not distributed equally throughout the economy. routine health issues and compounding the prob- Some sectors may even benefit financially, while lem. Beyond shocks to the health sector, epidemics others will suffer disproportionately. Pharmaceutical force both the ill and their caretakers to miss work companies that produce vaccines, antibiotics, or or be less effective at their jobs, driving down and other products needed for outbreak response are disrupting productivity. Fear of infection can result potential beneficiaries. Health and life insurance in social distancing or closed schools, enterprises, companies are likely to bear heavy costs, at least commercial establishments, transportation, and in the short term, as are livestock producers in the public services—all of which disrupt economic event of an outbreak linked to animals. Vulnerable and other socially valuable activity. populations, particularly the poor, are likely to suffer 46 FINANCE & DEVELOPMENT | June 2018 EPIDEMICS & ECONOMICS disproportionately, as they may have less access to requiring urgent research and development (R&D) health care and lower savings to protect against attention. That list has since been updated twice, financial catastrophe. most recently in February 2018 (see table). Economic policymakers are accustomed to man- Beyond this list, diseases that are currently endemic aging various forms of risk, such as trade imbalances, in some areas but could spread without proper control exchange rate movements, and changes in market represent another category of threat. Tuberculosis, interest rates. There are also risks that are not strictly malaria, and dengue are examples, as is HIV. economic in origin. Armed conflict represents one Pathogens resistant to antimicrobials are increasing such example; natural disasters are another. We in prevalence throughout the world, and widespread can think about the economic disruption caused pan-drug-resistant superbugs could pose yet another by outbreaks and epidemics along these same lines. hazard. Rapid transmission of resistant pathogens is As with other forms of risk, the economic risk of unlikely to occur in the same way it may with pan- health shocks can be managed with policies that demic threats, but the proliferation of superbugs is reduce their likelihood and that position countries making the world an increasingly risky place. to respond swiftly when they do occur. Managing risk A daunting set of threats Epidemic risk is complex, but policymakers have Several factors complicate the management of epi- tools they can deploy in response. Some tools min- demic risk. Diseases can be transmitted rapidly, imize the likelihood of outbreaks or limit their both within and across countries, which means that proliferation. Others attempt to minimize the health timely responses to initial outbreaks are essential. impact of outbreaks that cannot be prevented or In addition to being exacerbated by globalization, immediately contained. Still others aim to minimize epidemic potential is elevated by the twin phenom- the economic impact. ena of climate change and urbanization. Climate Investing in improved sanitation, provisioning of clean change is expanding the habitats of various common water, and better urban infrastructure can reduce the disease vectors, such as the Aedes aegypti mosquito, frequency of human contact with pathogenic agents. which can spread dengue, chikungunya, Zika, and Building strong health systems and supporting proper yellow fever. Urbanization means more humans live nutrition will help ensure good baseline levels of in close quarters, amplifying the transmissibility of health, making people less susceptible to infection. contagious disease. In rapidly urbanizing areas, the Of course, strengthening basic systems, services, and growth of slums forces more people to live in condi- infrastructure becomes easier with economic growth tions with substandard sanitation and poor access to and development; however, policies to protect spend- clean water, compounding the problem. ing in these areas even when budgets are constrained Perhaps the greatest challenge is the formidable can help safeguard developing economies from major array of possible causes of epidemics, including health shocks that could significantly impinge upon pathogens that are currently unknown. In December human capital and impede economic growth. 2015 the World Health Organization (WHO) pub- Investment in reliable disease surveillance in both lished a list of epidemic-potential disease priorities human and animal populations is also critical. Within ISTOCK.COM/PHOTO5963 ART: June 2018 | FINANCE & DEVELOPMENT 47 Diseases requiring urgent research and development attention, 2018 DISEASE DESCRIPTION BIOMEDICAL COUNTERMEASURES Crimean-Congo hemorrhagic Hemorrhagic fever caused by virus transmitted through ticks and livestock, with No vaccine available; ribavirin (antiviral) fever (CCHF) case-fatality rate of up to 40%. Human-to-human transmission is possible. provides some treatment benefit. Hemorrhagic fever caused by virus transmitted by wild animals, with case- Ebola virus disease Experimental vaccine available fatality rate of up to 90%. Human-to-human transmission is possible. Hemorrhagic fever caused by virus transmitted by fruit bats, with case-fatality Marburg virus disease No vaccine available rate of up to 88%. Human-to-human transmission is possible. Hemorrhagic fever caused by virus transmitted through contact with rodent No vaccine available Lassa fever urine or feces, with case-fatality rate of 15% in severe cases. Human-to-human Vaccine development funded by CEPI transmission is possible. Middle East respiratory syndrome Respiratory disease caused by a coronavirus transmitted by camels and No vaccine available coronavirus (MERS-CoV) humans, with case-fatality rate of 35%. Vaccine development funded by CEPI Severe acute respiratory Respiratory disease caused by a coronavirus transmitted from human to human No vaccine available syndrome (SARS) and from animals (possibly bats), with a case-fatality rate of 10%. Disease caused by a virus transmitted by fruit bats, pigs, and humans; can Nipah and henipaviral diseases manifest as an acute respiratory syndrome or encephalitis. Case-fatality rate Vaccine development funded by CEPI can reach 100%. Disease caused by a virus transmitted by contact with the blood or organs of Experimental, unlicensed vaccine Rift Valley fever (RVF) infected animals, or by mosquitos.
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