January 17, 2008
How Globalization Will Save Your Life
Bryan CaplanI second Arnold's recommendation of Alex's column in Forbes. But for me, the highlight is the way that he explains the link between population and economic growth, and the demand and supply of innovation.
First, demand:
The cost of developing drugs for rare and common diseases are about the same, but the revenues aren't. Pharmaceutical companies concentrate on drugs with larger markets because larger markets mean more profits.Second, supply:As a result, there are more drugs to treat diseases with a lot of patients than to treat rare diseases, and more drugs means greater life expectancy...
So imagine this: If China and India were as wealthy as the U.S., the market for cancer drugs would be eight times larger than it is today.
Of course, China and India are not yet as wealthy as the U.S., but their economies are growing rapidly, and with them, the market for new drugs.
[T]here are only about 6 million scientists and engineers in the entire world, nearly a quarter of whom are in the U.S. Poverty means that millions of potentially world-class scientists today spend their lives trying to eke out a subsistence living, rather than leading mankind's charge into the future. But if the world as a whole were as wealthy as the U.S. and were devoting the same share of population to research and development, there would be more than five times as many scientists and engineers worldwide.In short, many of the American protectionists of today will one day be alive thanks to Chindian technology. Markets are short on poetic justice, but long on irony.
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