COVID-19: Insights from Innovation Economists

34 Pages Posted: 14 Apr 2020 Last revised: 1 May 2020

See all articles by George Abi Younes

George Abi Younes

Ecole Polytechnique Fédérale de Lausanne

Charles Ayoubi

Ecole Polytechnique Fédérale de Lausanne - Management of Technology and Entrepreneurship Institute (MTEI)

Omar Ballester

Ecole Polytechnique Fédérale de Lausanne

Gabriele Cristelli

Ecole Polytechnique Fédérale de Lausanne

Matthias van den Heuvel

Ecole Polytechnique Fédérale de Lausanne

Ling Zhou

Ecole Polytechnique Fédérale de Lausanne

Gabriele Pellegrino

Ecole Polytechnique Fédérale de Lausanne

Gaétan de Rassenfosse

Ecole Polytechnique Fédérale de Lausanne

Dominique Foray

Ecole Polytechnique Fédérale de Lausanne - Management of Technology and Entrepreneurship Institute (MTEI)

Patrick Gaule

University of Bath

Elizabeth Webster

Swinburne University of Technology; University of Melbourne - Melbourne Institute: Applied Economic & Social Research

Date Written: April 14, 2020

Abstract

The present document provides the take of innovation economists on the current pandemic. It is addressed to the general public and focuses on questions related to the Science, Technology, and Innovation (STI) ecosystem. It does not present new research findings. Instead, it provides a reading of current real-world developments using economic reasoning and relying on existing economic research.

The first part of the report explains the root causes for a general underinvestment in Research and Development (R&D), with a particular focus on vaccines. These causes include an insufficient demand for vaccines in normal times and the very characteristics of R&D. Governments can intervene to mitigate these problems, but government intervention comes with its own set of issues. We discuss three of them, namely free riding, setting research priorities, and acting on scientific knowledge.

The second part discusses several aspects related to current STI policy reactions. First, we observe a sizable shift of funds towards research on SARS-CoV-2. Aren’t we wasting money by allocating so much of it on one single scientific problem? Using the concept of the ‘elasticity of science,’ we argue that we are far from a situation where additional funding would represent a waste of money.

Second, we also observe an unprecedented level of cooperation among researchers but also an intense competition to find therapeutic solutions and vaccines. We seek to make sense of this apparent antonymy, highlighting how both cooperative and competitive forces might accelerate research.

Third, we focus on one policy tool, namely patents, and we discuss whether the existence of patents hampers the search for a solution. We argue that it might, but we provide ways in which patents can be beneficial. They can accelerate research (such as through patent pools) or ensure greater access to innovations (such as with compulsory licensing).

Fourth, we notice that the whole STI ecosystem has been rapidly refocusing on SARS-CoV-2 in a way similar to mission-oriented R&D (MOR) programs such as the Manhattan Project in the 1940s. We highlight the fundamental differences between MOR and the present situation. Today’s response is characterized by a proliferation of a wide range of innovative solutions offered by a complex set of institutions and actors with great intellectual freedom and decentralized competition.

The third part of the report assesses some potential long-term impacts of the COVID-19 pandemic. We firstly discuss its impact on R&D investment. We explain how innovation might be negatively affected by a prolonged economic downturn and highlight the crucial role of stimulus packages in confronting the recession. We also address the influence of the crisis on ICT, arguing that it has been a formidable catalyst for ICT adoption. Next, we focus on clean technologies, another major societal challenge besides the pandemic. There are strong reasons for why cleantech investment may suffer. However, the crisis also offers significant opportunities to accelerate the green transition. Finally, we focus on open science, in particular on open access and open data. The current crisis could be a catalyst for the adoption of FAIR (Findable, Accessible, Interoperable, and Reusable) Data Practices.

The last part of the report offers some concluding thoughts. The STI policy response cannot be limited to the urgent need for ‘technological fixes.’ A second line of response involves the production of new knowledge to prevent outbreaks (ex-ante) or mitigate their effects (ex-post). Furthermore, the current crisis is a reminder that all branches of science matter. The pandemic has many facets, and a significant number of scientific disciplines can contribute to dealing with it. We conclude with a forward-looking note, arguing that the most substantial impact of the pandemic may lie outside of the public health realm or the science system. It offers a unique opportunity to adapt the set of rules that govern our society.

Keywords: COVID-19, economics, innovation, policy

Suggested Citation

Abi Younes, George and Ayoubi, Charles and Ballester, Omar and Cristelli, Gabriele and van den Heuvel, Matthias and Zhou, Ling and Pellegrino, Gabriele and de Rassenfosse, Gaétan and Foray, Dominique and Gaule, Patrick and Webster, Elizabeth M., COVID-19: Insights from Innovation Economists (April 14, 2020). Available at SSRN: https://ssrn.com/abstract=3575824 or http://dx.doi.org/10.2139/ssrn.3575824

George Abi Younes

Ecole Polytechnique Fédérale de Lausanne ( email )

Station 5
1015 Lausanne
Switzerland

Charles Ayoubi

Ecole Polytechnique Fédérale de Lausanne - Management of Technology and Entrepreneurship Institute (MTEI) ( email )

Station 5
1015 Lausanne
Switzerland

HOME PAGE: http://https://people.epfl.ch/charles.ayoubi

Omar Ballester

Ecole Polytechnique Fédérale de Lausanne ( email )

Station 5
1015 Lausanne
Switzerland

Gabriele Cristelli

Ecole Polytechnique Fédérale de Lausanne ( email )

Station 5
1015 Lausanne
Switzerland

Matthias Van den Heuvel

Ecole Polytechnique Fédérale de Lausanne ( email )

Station 5
1015 Lausanne
Switzerland

Ling Zhou

Ecole Polytechnique Fédérale de Lausanne ( email )

Station 5
1015 Lausanne
Switzerland

Gabriele Pellegrino

Ecole Polytechnique Fédérale de Lausanne ( email )

Station 5
Odyssea 1.04
1015 Lausanne, CH-1015
Switzerland

Gaétan De Rassenfosse (Contact Author)

Ecole Polytechnique Fédérale de Lausanne ( email )

Station 5
Odyssea 1.04
1015 Lausanne, CH-1015
Switzerland

Dominique Foray

Ecole Polytechnique Fédérale de Lausanne - Management of Technology and Entrepreneurship Institute (MTEI) ( email )

Odyssea
Station 5
Lausanne, 1015
Switzerland

Patrick Gaule

University of Bath ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

Elizabeth M. Webster

Swinburne University of Technology ( email )

Cnr Wakefield and William Streets, Hawthorn Victor
3122 Victoria, Victoria 3122
Australia

University of Melbourne - Melbourne Institute: Applied Economic & Social Research ( email )

Level 5, FBE Building, 111 Barry Street
Parkville, Victoria 3010
Australia

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