A TIP Against the COVID-19 Pandemic

IMF Working Papers, July 3, 2020

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A universal testing and isolation policy is the most viable way to vanquish a pandemic.
Implementation requires:
- (i) an epidemiological rather than clinical approach to testing, sacrificing accuracy for scalability, convenience and speed; and
- (ii) state intervention to ramp up production, similar to True Industrial Policy (TIP), on a global level to achieve a scale and speed the market alone would fail to provide.
The authors sketch a strategy to tackle market failures and implement smart testing, especially in densely populated areas.
The estimated cost of testing is dwarfed by its return, mitigating the economic fallout of the pandemic.

Universal testing combined with isolation is positioned as the primary strategy to end a pandemic.
Epidemiological testing prioritizes scalability, convenience, and speed over clinical accuracy.
True Industrial Policy (TIP) at a global scale is necessary to overcome market failures in production and distribution of tests.
Targeting densely populated areas with smart testing strategies is emphasized.

Adopt an epidemiological testing approach to enable rapid, scalable testing programs.
Implement state-led industrial policy measures to ramp up production of test kits and associated capacity.
Design testing strategies to address market failures that prevent adequate scale and speed from private markets alone.
Prioritize deployment in densely populated areas to maximize effectiveness.

Subject: COVID-19, Early warning systems, Expenditure, Financial crises, Health, Labor, Population and demographics, Public expenditure review
Keywords: containment policy, coronavirus, COVID-19, Early warning systems, epidemic, false positive, federal government, financial support, Global, growth, Industrial policy, manufacturing, pharma company, private sector, production capacity, Public expenditure review, SIR model, State intervention, test kit, testing rate, value chain, WP