{
  "title": "What Drives Innovation? Lessons from COVID-19 R&D",
  "publication": "IMF Working Papers, February 19, 2021",
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  "summary": "To examine the drivers of innovation, this paper studies the global R&D effort to fight the deadliest diseases and presents four results. We find: (1) global pharmaceutical R&D activity—measured by clinical trials—typically follows the ‘law of diminishing effort’: i.e.",
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    {
      "heading": "Summary of purpose and approach",
      "content": "- Purpose: To examine the drivers of innovation by studying the global R&D effort to fight the deadliest diseases.\n- Approach: Measure global pharmaceutical R&D activity using clinical trials and compare cross-disease patterns and the COVID-19 response."
    },
    {
      "heading": "Key findings",
      "content": "- Law of diminishing effort:\n  - Global pharmaceutical R&D activity—measured by clinical trials—typically follows the “law of diminishing effort”: i.e. the elasticity of R&D effort with respect to market size is about ½ in the cross-section of diseases.\n- COVID-19 as an exception:\n  - The R&D response to COVID-19 has been a major exception to this law, with the number of COVID-19 trials being 7 to 20 times greater than that implied by its market size.\n- Aggregate short-term elasticity:\n  - Aggregate flow of clinical trials increased by 38% in 2020, demonstrating that the aggregate short-term elasticity of science and innovation can be very large.\n  - There was limited crowding out of trials for non-COVID diseases.\n- Role of public institutions and incentives:\n  - Public research institutions accounted for 70 percent of all COVID-19 clinical trials globally.\n  - Public research institutions were 10 percentage points more likely to conduct a COVID-19 trial relative to private firms.\n- Implication for innovation policy:\n  - While market size is an important driver (“if the market size is sufficiently large then innovation will happen”), scaling up global innovation may require a broader perspective, including early-stage incentives, non-monetary incentives, and public institutions."
    },
    {
      "heading": "Subject and keywords",
      "content": "- Subject: Economic sectors, Financial crises\n- Keywords: COVID-19, Innovation, Market Size, Pharmaceutical Industry\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2021/02/20/what-drives-innovation-lessons-from-covid-19-r-d-50096"
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    "Authors: Ruchir Agarwal, Patrick Gaulé",
    "Published: February 19, 2021",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781513570068.001",
    "Purpose: To examine the drivers of innovation by studying the global R&D effort to fight the deadliest diseases.",
    "Approach: Measure global pharmaceutical R&D activity using clinical trials and compare cross-disease patterns and the COVID-19 response.",
    "Law of diminishing effort:",
    "COVID-19 as an exception:",
    "Aggregate short-term elasticity:",
    "Role of public institutions and incentives:",
    "Implication for innovation policy:",
    "Subject: Economic sectors, Financial crises",
    "Keywords: COVID-19, Innovation, Market Size, Pharmaceutical Industry",
    "**Working Paper**"
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