Is medical innovation the key to global economic growth?

Wednesday, November 13, 2019

 

The global economy owes much of its success to better healthcare, writes Columbia University Associate Professor Bahven Sampat in the Global Innovation Index 2019.

 

This article is part of a series about the power of innovation to solve social and economic challenges. Stories and statistics are drawn from the Global Innovation Index 2019 – your guide to world-changing ideas.

 

Over the past decade, global spending on healthcare has grown at around double the rate of gross domestic product (GDP). In 2018, global healthcare expenditure was US$7.6 trillion, and by 2020, estimated global health expenditures will approach US$9 trillion.

 

Improvements to healthcare generate obvious social returns: in the past 100 years, better sanitation and medicine have doubled life expectancy in developing and developed countries alike, and drastically improved our quality of life.

 

The economics of living longer

 

To what extent has a healthier population contributed to the global economy? Observing that greater longevity expands the global workforce, Nobel-Prize winning economist William Nordhaus calculated that the economic value of greater longevity in the last 100 years matches economic growth in all other sectors.

 

There are statistics to support his estimate. For instance, while billions of dollars have been ploughed into cancer treatments, between 1988 and 2000, improvements to cancer survival generated social benefits valued at around US$1.9 trillion – far outstripping investment. Similarly, by the end of the 20th century, new HIV/AIDS drugs generated US$1.4 trillion in economic value in the US alone.

 

Source: Global Innovation Index 2019, page 43

 

Looking ahead

 

For future medical innovations to have major economic impact, one of several things will have to be true:

 

• innovations must help prevent or treat diseases with a high disease burden

 

• the process of innovation should be transformed by new technologies like AI, gene editing and cell therapy, to open up new areas of exploration and invention

 

• new technologies must facilitate broad systemic improvements in healthcare delivery, lowering costs and/or improving outcomes.

 

Although predicting the impact of specific areas of medical innovation is difficult, the potential for new medical innovation to generate valuable gains seems high.

 

The future of health innovation will depend on the policies and institutions created by national and global actors to support research and innovation. These are important issues for policymakers and the public to consider carefully and deliberately—given the transformative economic, social, and health impacts that new medical technologies have had historically, and the enormous potential value of further health improvements for current and future generations.

 

The Global Innovation Index 2019 is the result of a collaboration between Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO) as co-publishers, and their Knowledge Partners, Confederation of Indian Industry, Dassault Systemes, Sebrae, Brazilian Micro and Small Industry Support Services, and Brazilian Confederation of Industry.

 

Published under Creative Commons Attribution-NoDerivatives 4.0 International (CC BY-ND 4.0) licence. That means you can copy and redistribute the material in any medium or format for any purpose, even commercially, but you cannot change it in any way.

https://creativecommons.org/licenses/by-nd/4.0/

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