Types of Research
The share of private sector funding, relative to public sector funding, for drug, vaccine, and diagnostic research & development (R&D) differs considerably across diseases. Private sector investment in overall health R&D exceeds $150 billion annually, but is largely concentrated on non-communicable chronic diseases with only an estimated $5.9 billion focused on "global health", targeting diseases that primarily affect low and middle-income countries (LMICs). We examine the evidence for five specific disincentives to private sector global health R&D investment: scientific uncertainty, weak policy environments, limited revenues and market uncertainty, high fixed and sunk costs, and downstream rents from imperfect markets. Though all five may affect estimates of net returns from an investment decision, they are worth examining separately as each calls for a different intervention or remediation to change behavior.
In a review of 285 sources published in the past 15 years that discuss private investment in 47 individual diseases, we analyzed and recorded information on which factors are most commonly discussed as either barriers or drivers to private sector global health R&D investment. We find that price, information, and market power are the most commonly discussed key factors. The literature suggests that low or uncertain LMIC product prices relative to prices in the U.S. or other HICs limit private global health R&D investment, and that LMIC market data gaps further hinder revenue forecasting and firm or product market entry. Though expected revenues from global health R&D may be low or uncertain, costs are often high, and incurred upfront with certainty, further deterring private investment in diseases with uncertain revenues. Further, relatively strong downstream market power may make it cheaper to purchase (license) rather than produce innovations (conduct R&D), reducing private sector incentives to invest in upstream global health R&D.
Though a variety of policy tools exist to promote private sector investment in R&D, including push mechanisms (public research funding, R&D tax credits) and pull mechanisms (advance purchase commitments, orphan drug programs, priority review vouchers, and wild-card patent extensions), evidence of effectiveness is mixed. While we find 42 sources suggesting that some combination of policy tools had a positive impact on catalyzing private R&D funding for diseases more prevalent in LMICs, 11 sources report mixed results, and 3 sources report negative impacts of policies.
Proprietary science and LMIC health data gaps represent further barriers to private global health R&D, including data science and bioengineering. To the extent that health data are more limited for global health diseases, there is reason to speculate that as the industry shifts more R&D to biotechnology even less will be directed at diseases prevalent in LMICs. Both industry experts and the literature additionally lament the limited market data available to better assess potential market outcomes – yet despite potential industry-wide gains, there is no clear incentive for any individual firm within this sector to either fund or contribute to such a data service.
Donor countries and multilateral organizations may pursue multiple goals with foreign aid, including supporting low-income country development for strategic/security purposes (national security, regional political stability) and for short-and long-term economic interests (market development and access, local and regional market stability). While the literature on the effectiveness of aid in supporting progress on different indicators of country development is inconclusive, donors are interested in evidence that aid funding is not permanent but rather contributes to a process by which recipient countries develop to a point that they are economically self-sufficient. In this report, we first review the literature on measures of country self-sufficiency as discussed in multilateral and bilateral donor policy documents and in academic studies and gray literature on aid transitions. While self-sufficiency is inconsistently defined in the literature and donor policies, commonly reported measures or indicators do fall into five major categories: economic performance (e.g. GNI per capita), access to non-aid finance (e.g. creditworthiness, ability to raise tax revenue, investment capacity, trade capacity), institutional performance (e.g. quality of country institutions, country policy assessment, absorptive capacity, gaming behavior, policy ownership), aid dependence (e.g. aid to GDP ratio, Aid per capita, aid to government expenditure ratio), and vulnerability (e.g. instability, poverty, population).
The question of whether there is a causal link between receiving aid and transitioning to self-sufficiency is difficult to answer with certainty, as we can never know the counterfactual, i.e., what would have happened to a country’s trajectory in the absence (or presence) of aid. Further, the relationship between aid and self-sufficiency is endogenous, as one key indicator of self-sufficiency is reduced reliance on aid. The existing literature is largely descriptive or non-experimental and does not causally test the impact of aid on measures of self-sufficiency, though some quasi-experimental studies test for associations between aid and particular indicators related to self-sufficiency, such as GDP growth. Much of the literature on international aid focuses on aid effectiveness, rather than the relationship between aid and self-sufficiency, and self-sufficiency is not consistently defined or measured. However, descriptive evidence from illustrative case studies does shed some light on the conditions associated with transitions toward self-sufficiency in certain contexts.
We analyze trends in aid and indicators of self-sufficiency for Botswana, India, Indonesia, Ghana, and Rwanda, all countries highlighted in the literature on self-sufficiency as presenting examples of success or challenges in transitions toward self-sufficiency as measured by various indicators. For each case study we evaluate the conditions under which increased self-sufficiency was realized (or not) in each country, and summarize evidence from the literature on the role of aid in this process. These case studies reveal six main areas of ongoing debate in published and gray literature: whether or not aid negatively impacts a country’s progress toward self-sufficiency; whether transitioning countries off of aid should be the assumed goal of donors; whether tax capacity can positively impact transitions toward self-sufficiency; whether technical assistance and capacity-building programs can strengthen institutional characteristics associated with self-sufficiency; whether a “missing middle” of government funding status can threaten self-sufficiency of countries as they transition out of aid; and whether emerging donors may impact the aid landscape, especially in terms of government aid policy ownership
Cash transfer programs are interventions that directly provide cash to target specific populations with the aim of reducing poverty and supporting a variety of development outcomes. Low- and middle-income countries have increasingly adopted cash transfer programs as central elements of their poverty reduction and social protection strategies. Bastagli et al. (2016) report that around 130 low- and middle-income countries have at least one UCT program, and 63 countries have at least one CCT program (up from 27 countries in 2008). Through a comprehensive review of literature, this report primarily considers the evidence of the long-term impacts of cash transfer programs in low- and lower middle-income countries. A review of 54 reviews that aggregate and summarize findings from multiple studies of cash transfer programs reveals largely positive evidence on long-term outcomes related to general health, reproductive health, nutrition, labor markets, poverty, and gender and intra-household dynamics, though findings vary by context and in many cases overall conclusions on the long-term impacts of cash transfers are mixed. In addition, evidence on long-term impacts for many outcome measures is limited, and few studies explicitly aim to measure long-term impacts distinctly from immediate or short-term impacts of cash transfers.
Although the programs reported on in the reviews include 37 cash transfer programs from Sub-Saharan Africa, 36 from Latin America, 18 from South Asia, ten from East Asia and the Pacific, three from Europe and Central Asia, five from North America, and four from the Middle East and North Africa, much of the evidence comes from multiple studies evaluating the most prominent cash transfer programs, especially Latin American programs. More evidence on the long-term impacts of cash transfer programs and on how these impacts might differ by context and program design will emerge as more of the existing global cash transfer programs mature and are evaluated. The available evidence indicates that cash transfer programs can be cost-effective, depending on the context and program design. Evidence of the cost-effectiveness, scalability, and sustainability of these programs is limited, but a few studies present initial findings on factors that appear to support or hinder cost-effectiveness, scalability, and sustainability. Several reviews suggest that design characteristics of cash transfer programs, including conditionality, targeting, and payment size, timing, frequency, and duration may all affect the impacts of the programs. Evidence on whether CCTs or UCTs are more effective at improving particular outcomes is mixed and may depend on the outcome measure of interest, but the reviews indicate that programs generally have greater impacts when targeting poorer or more marginalized populations and when providing transfers of larger size. Few reviews compare outcomes between cash transfer programs and other types of programs or interventions, though there is some limited evidence indicates that cash transfer programs might be more effective than alternatives to improve outcome measures related to poverty under specific circumstances.
An ongoing stream of EPAR research considers how public good characteristics of different types of research and development (R&D) and the motivations of different providers of R&D funding affect the relative advantages of alternative funding sources. For this project, we seek to summarize the key public good characteristics of R&D investment for agriculture in general and for different subsets of crops, and hypothesize how these characteristics might be expected to affect public, private, or philanthropic funders’ investment decisions.
This research considers how public good characteristics of different types of research and development (R&D) and the motivations of different providers of R&D funding affect the relative advantages of alternative funding sources. We summarize the public good characteristics of R&D for agriculture in general and for commodity and subsistence crops in particular, as well as R&D for health in general and for neglected diseases in particular, with a focus on Sub-Saharan Africa and South Asia. Finally, we present rationales for which funders are predicted to fund which R&D types based on these funder and R&D characteristics. We then compile available statistics on funding for agricultural and health R&D from private, public and philanthropic sources, and compare trends in funding from these sources against expectations. We find private agricultural R&D spending focuses on commodity crops (as expected). However contrary to expectations we find public and philanthropic spending also goes largely towards these same crops rather than staples not targeted by private funds. For health R&D private funders similarly concentrate on diseases with higher potential financial returns. However unlike in agricultural R&D, in health R&D we observe some specialization across funders – especially for neglected diseases R&D - consistent with funders’ expected relative advantages.
The concept of global public goods represents a framework for organizing and financing international cooperation in global health research and development (R&D). Advances in scientific and clinical knowledge produced by biomedical R&D can be considered public goods insofar as they can be used repeatedly (non-rival consumption) and it is difficult or costly to exclude non-payers from gaining access (non-excludable). This paper considers the public good characteristics of biomedical R&D in global health and describes the theoretical and observed factors in the allocation R&D funding by public, private, and philanthropic sources.
We first conducted a literature review on factors theoretically associated with funding for early-stage biomedical research, including the expected correlates of funding levels for basic research, pre-clinical studies, and Phase I – IV clinical trials. To explore possible relationships between theorized drivers of R&D funding and actual funding flows, we analyzed evidence on how public, private, and philanthropic investments are affected by the public good characteristics of four high-burden diseases that disproportionately affect low- and middle-income countries: malaria, tuberculosis, hepatitis C, and soil-transmitted helminthiases.
Multiple factors influence R&D investment by public, private and philanthropic funders, including disease pathology and epidemiology, the current intervention landscape, policy and regulatory environment, and current and projected market conditions. Private sector investments are theorized to be primarily determined by opportunities for positive financial returns, while public and philanthropic investments may be motivated by a variety of social returns. We examine the specific funding decision factors identified in the literature for each of the four selected diseases.
Factors influencing the allocation of funds for biomedical R&D vary by disease, resulting in uneven funding across diseases. Due to issues of transparency and a lack of systematically collected data regarding R&D investments for diseases in low- and middle-income countries, especially from the private sector, these factors can be difficult to observe and measure. Furthermore, persistent data gaps can affect both aggregate investment and cooperative agreements.
A “new wave” of digital credit products has entered the digital financial services (DFS) market in recent years. These products differ from traditional credit by offering loans to borrowers that can be applied for, approved, and disbursed remotely (often without any brick-and-mortar infrastructure), automatically (generally minimizing or eliminating person-to-person interaction), and instantly (often in less than 72 hours). Digital credit also increasingly considers creditworthiness by using alternative (nontraditional) data—ranging from mobile phone activity to utility payments and social media data—potentially allowing for loans to populations previously unable to access bank credit. Two EPAR reports review the characteristics of digital credit offerings in India, Kenya, Nigeria, Tanzania, and Uganda, and regulations specific to digital credit in Africa and Asia.
In Sub-Saharan Africa, 12% of adults now report having a mobile money account, representing over a quarter of the share of those who have any kind of financial account at all. As mobile money expands, there is interest in how regulatory frameworks develop to support digital financial services (DFS) and also support broader financial inclusion. In theory, protecting consumers from risk, and ensuring that they have the information and understanding required to make informed decisions, may increase their confidence and trust in mobile money systems, leading to higher adoption and usage rates. However, consumer protection regulations may also carry certain trade-offs in terms of cost, usage, and innovation. The challenge, according to proponents of consumer protection, is to develop regulations that promote access and innovation, yet still offer an acceptable level of consumer protection. We review the literature on consumer protection institutions and regulatory documents for DFS (particularly mobile money) in 22 developing countries, and identify examples of specific consumer protection regulations relevant to mobile money in each country. Following an introduction to regulatory institutions and documents relating to consumer protection and DFS, we identify examples of regulations covering charges to consumers including fees, tariffs, and taxes for DFS in each country. We then review consumer protection regulations relating to costs from consumer losses resulting from system errors, erroneous transactions, agent misconduct, bankruptcy, and fraud. We further review regulations relating to transparency of provider terms and conditions, procedures for protecting consumers from harm, and complaints and dispute resolution.
This brief reviews the various definitions of global public goods (GPGs) and regional public goods (RPGs) found in the literature and provides examples of each in six frequently discussed sectors: environment, health, knowledge, security, governance, and infrastructure. We identify multiple alternative definitions that have gained some traction in the literature, but GPGs are generally agreed to exhibit publicness in consumption, distribution of benefits, and decision-making. Because policy choices determine what is and what is not a GPG, there cannot be a fixed list of such goods; some always have the property of global publicness, while others have over time changed from being local or national to being global in terms of benefits and costs. GPGs are thus redefined as goods that are in the global public domain. GPG and RPG financing mechanisms include payments by users and beneficiaries, taxes, fees, and levies, private funding by non-profit corporations, profit-making firms, and philanthropic individuals and organizations, national and international public resources, and partnerships between several sources of financing. We conclude with an analysis of trends in GPG and RPG financing through Official Development Assistance (ODA) using time series data from the OECD’s Creditor Reporting System and other sources. We find that 14% of ODA in 2014 was allocated to sub-sectors labelled by Reiner et al. as GPGs, while 15% of ODA was allocated to RPGs, and that GPG and RPG spending has steadily increased from 2002-2014.
This brief provides a summary of background research for future aid-related EPAR projects. We first review prominent measures of aid, examining the definition and scope of Official Development Assistance (ODA) as well as common criticisms and alternatives to this measurement. We also provide a summary of current research on bilateral and multilateral aid allocation trends. The aid allocation literature broadly concludes that donor countries target aid based on both the needs of recipients and on strategic interests, but that aid allocation criteria differ by donor and by type of aid. Finally, we summarize current aid effectiveness literature and key challenges in exploring the impact of aid. A number of challenges in determining the effectiveness of aid were common in the literature, including the micro-macro paradox, difficulties in identifying causal mechanisms and direction of causality, and data limitations.