Get help from the best in academic writing.

The Main Constraints To Economic Growth Economics Essay

There are different constraints to economic growth in any country. These constraints differ from one country to another according to different economic situations in these countries. The following are the main constraints that usually affect developing countries as well as developed ones.
1. Lack of Savings The Harod Domar model suggests the levels of savings are important for determining levels of investment and hence the rate of economic growth. If there is a lack of savings, it limits investment and therefore, there is little prospect of economic development. However, sometimes the level of savings is misused on unproductive investment projects. The important thing is not level of savings but the economic management of investment resources. Also, low savings may be countered by foreign investment
2. Corruption This can cause foreign aid to be siphoned off into the bank accounts of politicians. It means that resources for development will not be used in their entirety for economic development. In some cases the % of corruption can be very high. However, this has not stopped some countries from developing e.g. China. Corruption is endemic in the world. It is a major problem in China, but hasn’t stopped growth. Also, corruption may just take a % of investment, therefore there are still funds being used for investment. So unless stopping corruption, the economic growth in any country can not easily attained.
3. Human Capital Lack of human capital is a constraint on growth. To diversify the economy and move towards industrialisation it is necessary to have skilled labour. The World Bank says human capital accounts for about 65% of economic development. Therefore, it can be a very significant constraint to growth. In many cases attempts to industrialise the economy suffered from lack of human capital. However, in many industries competitiveness can be achieved through low wage costs, as in China. Therefore, for labour intensive industries low wage costs can be more important than labour productivity.
4. Poor Macroeconomic Conditions The fundamental problem behind the poor macroeconomic situation has been high and unsustainable fiscal deficits. High inflation and unstable exchange rates have made business decision-making and planning difficult. All this factors have reduced private sector investment, thus jeopardizing future economic growth.
5. Inefficient Tax and Incentive System Although tax and incentives systems are broadly competitive, the tax system is geared towards revenue collection rather than towards supporting economic growth. The incentive system is complex, non-transparent, non-automatic and discretionary. It favours new international investments and does not consider existing domestic investors. This puts existing businesses at a disadvantage if they want to re-invest to modernise. The approval of incentives and allocation of land is slow and uncertain. Incentives once granted are not guaranteed, and the incentive regime is unpredictable because of policy reversals.
6. Poor Infrastructure A country’s landlocked status is a major disadvantage to businesses as it increases the costs to importers and exporters relative to regional competitors. The weakness of the transport infrastructure includes poor access to ports, limited air links and freight capacity, limited rail capacity and poor condition of roads serving manufacturing, mining, tourism and rural producing areas. In addition, the problems with utilities (water, electricity and communication) affect production in the country because they are not only unreliable but also inefficient and expensive and hence slow economic growth.
7. Poor Private and Public Co-operation and Dialogue When there has been weak co-operation and consultation between the private and public sectors due to a lack of a recognised, representative and legal institution that would serve as a liaison between the two sides, such as a Business Council. This gap definitely is a main constrain to economic growth.
As is the case in any new planning scheme there must be some advantages and disadvantages. Sustaining a fast economic growth is not an exemption; the following table summarises the main merits and demerits that affect any country’s ability of achieving faster economic growth. The advantages and disadvantages of economic growth are fiercely debated by economists, environmentalists and other commentators. In this note we consider some of the economic and social costs and benefits from expanding levels of production and consumption. In particular we focus on the idea of sustainable growth.
Table1: Metris and Demerits of Economic Growth Advantages Disadvantages
Improvements in living standards
Inflation risks
Rising Employment:
The environment degradation
The accelerator effect of growth on capital investment
Inequalities of income and wealth
Greater business confidence
Regional disparities
The “fiscal dividend” to the government (more money to finance spending projects).
Potential environmental benefits
Designed by the Author, 2010

Economic Impact Of Technology Interventions Streptokinase Economics Essay

About 14 million patients in India suffer from heart attacks every year. Of these, 2.8 million patients can benefit from a clot buster drug which would save the patient’s life and provide room for further treatment such as medical stents if so required. Coronary heart disease claims over a million lives every year in India. There is a need for a safe and affordable clot buster drug. At the turn of the century, clot buster drug formulations were either imported or based on imported bulk drug and formulated domestically. They were expensive, equivalent to eighteen months (tPA) to two months (Streptokinase) of per capita income at that time. Cost matters more in India unlike in countries with universal health insurance as most Indians spend out of own pocket for health expenses. Given India’s prowess in generic drugs, the production capacity gap in an area of health emergency with severe consequences seems an anomaly. The gap stems from the fact that clot buster drugs are biotechnology drugs which require competencies quite different from those of the usual drugs based on chemical synthesis.
CSIR-IMTECH, Chandigarh made efforts to develop a process to produce clot buster drugs. Initial efforts were unsuccessful, in part due to the complex nature of the animal sources based protein drug. Subsequent teams picked up the challenge again, chose a simpler molecule and after some misses, could develop a process for natural streptokinase and then recombinant streptokinase, both harnessed from micro-organisms. The misses were important steps providing crucial learning for the process development. Streptokinase technology was transferred to industry partners, natural Streptokinase to Cadila Pharma and recombinant Streptokinase to Shasun Pharma. Implementing the technology on the shopfloor faced difficulties. In the case of recombinant streptokinase, regulatory approvals took time to obtain. The knowing-doing gap was bridged by closing the competency gap through sustained engagement between the CSIR-IMTECH scientists and the managers and technology staff of the licensees. Perseverance, team perseverance, allowing mistakes, dynamic learning from disciplined failure, give-and-take by both the scientists’ team and the industrial practitioners’ team, and a “can-do, must-do, done” mind-set were the keys to success. Leadership steering at both the Lab and the Industry with a commitment to collaborate and continual collaborating was crucial. This led the transition from the lab scale to industrial scale. The respective products were launched in 2001 and 2009.
The results are quite encouraging. Prices have dropped (by 65 percent, to less than one month of per capita income), availability has increased, access to a life-saving medicine has risen, and patients have realized a worth of over Rs. 16,000 crores due to the CSIR-IMTECH/licensees Streptokinase. The economic impact, or the additional benefit that would be lost if this CSIR-IMTECH Streptokinase technology intervention had not been there, is assessed based on medical impact of Streptokinase and using per capita income to be Rs. 2180 crores. The Lab itself accomplished net earnings valued at Rs.1.8 crores and the Industry partners together realized value addition of Rs. 17 crores.
Innovating for affordable healthcare is inclusive innovation. The benefits to patients eclipse the benefits to those who generated the technology intervention. This pursuit of innovation continues. CSIR-IMTECH has taken the science of clot-buster drugs to a level where improved Streptokinase (smarter streptokinase) molecules will have the advantages of the far more expensive animal cell line based tPA but will be much more affordable. Similarly, while access has expanded (about 120,000 standard doses), there remain millions of patients in need of this life-saving drug. More needs to be done.
Introduction Heart attacks, strokes, respiratory and cardiac failure have a common enemy in blood clots in the bloodstream that can block blood supply to the heart muscle, any part of the brain or the lungs. The consequence of blockage is damage to the heart muscle, the brain cells, or the lung tissue which is usually irreversible and debilitating, if not fatal. Extreme consequences can arise if the treatment is not administered within a window of few hours (3-4.5 hours, Klabunde (2007), Hacke et. al. (2008)). Then, the heart or brain tissue, as the case may be, gets damaged which is mostly irreversible. Treatments range from clot-dissolving medication to surgical intervention such as angioplasty or insertion of stents and open chest bypass surgery. Clot busters, as clot dissolving drugs are called, attack the clot itself to dissolve it and restore blood supply. Angioplasty is an invasive and expensive procedure where blocked arteries are opened up using medical stents thus making more space for the blood supply to be restored. Similarly, bypass surgery is invasive and very expensive (see appendix 1). Prevention in high-risk patients (hardened and narrowed/blocked arteries) is via blood thinner drugs that reduce blood density allowing blood to flow through the reduced space. Despite preventive treatment, clots can form and occlusion in blood vessels can occur. Then, clot buster drugs are life saviours.
In India, more than a million patients die due to coronary heart disease every year (appendix 1). Until the year 2001, no domestic production of clot-busters existed. The formulations were imported: among others, the lead formulations of Streptokinase – “Kabinase” by Kabi Pharmacia, Sweden and “Streptase” by Hoechst Marion Roussel, Germany – were priced then between Rs. 3000 to Rs. 4000 per vial (Krishnan (2000)). The dominant drug in this class of drugs, Tissue Plasminogen Asctivator (tPA) cost more than Rs. 30,000 per vial. Thus, clot buster drugs were expensive and the supply was short of requirement. In terms of per capita income at that time, this amounted to eighteen months of income for tPA and about two months of income for Streptokinase. The Streptokinase market was about 21 thousand vials of standard dose of 1.5 miu [1] . Lack of affordability could have restricted access. Given Indian pharmaceutical industry’s prowess in generic drugs, realized through strengths in organic chemicals’ synthesis and process engineering, this raises the question about the obstacles. The Indian pharmaceutical industry was essentially based on chemical entities whereas clot buster drugs are based on biotechnology [2] which was almost non-existent in India around the turn of the century. Thus, access to affordable life-saving clot buster drugs was limited domestically. To make it affordable, it had to be produced domestically. To produce it domestically, a suitable technology had to be developed. The technology had then to be transitioned from a laboratory scale to an industrial scale.
As in the case of affordable chemical drugs, the impetus of finding solutions and creating domestic capacity also came from CSIR Labs. In the case of generic chemical drugs, the core scientists came from Labs such as the NCL, Pune, IICT, Hyderabad and CDRI, Lucknow. These scientists and their industry contemporaries developed and implemented safe and cost effective technologies in a short time span. In the case of biotechnology, processes are being developed by IMTECH, Chandigarh and IICB, Kolkata among others. A program at IMTECH tapped into finding a solution to the problem of an affordable clot buster drug. The program has roots in projects dating back to 1989. The scientists examined the prevalent clot buster drug – tissue Plasminogen Activator (tPA) – but then chose instead an alternate less complex protein Streptokinase for development.
This study examines the benefits realized from the Streptokinase project, specifically, the natural Streptokinase biotechnology drug licensed to Cadila Pharma and the recombinant Streptokinase drug technology licensed to Shasun Pharma Limited, to quantify the value creation and to assess the economic impact.
The Industry The Indian pharmaceutical industry is among the top science based industries and focused on quality affordable drugs. It is estimated to be USD 21 billion or about Rs. 105,000 crores with exports accounting for about 40 percent (USD 8.7 billion) in 2009-10 (DOP (2011, 2012)). The industry is growing at over 10 percent per year. It is the sixth largest industry in India ranked by contribution to GDP (CSO (2011)). Globally, it ranks 3rd in terms of volume of production (10 percent of global share) and 14th largest in terms of value (1.5 percent of global share). A reason for the low value share is the lower cost of drugs in India — 5 to 50 percent less than in developed countries. Thus, the Indian drugs and pharmaceutical industry is focused on affordable drugs.
The Indian pharmaceutical industry is diverse. The number of units is quoted at over 20,000. However, the actual number of drug manufacturing licenses issued is about 5877 (GOI (2003)) [3] . Registered factories are about 3500 (CSO (2011)), the rest being smaller unregistered units. The units are spread across India and provide depth that accounts for the 10 percent global volume share. Apart from MNCs such as Glaxo Smithkline, Pfizer, Astra Zeneca, several Indian companies Ranbaxy, Dr. Reddy’s, Cipla, Lupin and others have global operations. Biotechnology based drugs have taken root and are growing. Companies such as Biocon, Serum Institute of India, Panacea Biotec, and Reliance Life Sciences have adopted biotechnology. The biotechnology industry value exceeds Rs. 20,000 crores in 2011-12 (BioSpectrum-ABLE Biotech Survey 2012).
Many Indian companies maintain the highest standards in purity, stability and international safety, health and environmental protection in production and supply of bulk drugs to buyer companies, who in turn are subject to stringent assessment by regulatory authorities in importing countries. These companies have secured regulatory approvals from USFDA, MHRA-UK, TGA-Australia, MCC-South Africa for their plants. Quality with certification is also a feature among many Indian pharmaceutical companies.
During the last decade, the industry has embraced new technologies and adapted to regulatory regimes more aligned to international regulatory regimes. New business models have emerged to cope with and thrive in this environment. All of these have a bearing on the development of a domestic clot buster drug, namely, Streptokinase.
With the advent of product patents in India from the 2005 amendment to the Patents Act, the focus has shifted from process engineering to drug discovery. Process engineering remains important. Several drugs will go off patent over the next few years and supply of cost effective quality generics would benefit the industry and the consumers. However, drug discovery is the new mantra. Drug discovery is a highly uncertain multi-million multi-year activity. For every one new drug molecule approved, the pipeline requires about twelve molecules for clinical trials’ candidacy. For every molecule reaching clinical candidacy, the pipeline of molecules is three molecules based on current success rates at each stage. The total costs spiral to over USD 600 [4] million per new drug molecule in the USA over a span of a decade. Patent protection allows recovery of the investment but also makes the drug expensive. In India, the cost per new drug molecule can drop to less than USD 150 million due to lower costs (such as those of clinical trials). This lower cost is encouraging Indian drug enterprises to engage in drug discovery as they adapt to the product regime. However, even at the reduced cost in India, the drug would still be expensive and out of reach of many Indians.
Drugs’ capacity building in India appears to be addressing reduction in costs and so also in the time span for drug discovery. Specialization along the chain of drug discovery via outsourcing is one emerging business model. Thus, R