The second article hypothesizes that the structure and operation of China’s central government account for most of that country’s initial resistance to international collaboration at the onset of the SARS epidemic (see Huang). The author describes considerable internal and external pressures that ultimately influenced the Chinese government to declare its “war on SARS.” He identifies both improvements in the Chinese public health infrastructure and challenges the country may face if SARS reemerges.

ESTIMATING THE GLOBAL ECONOMIC COSTS OF SARS*

Jong-Wha Lee and Warwick J. McKibbin

Korea University and The Australian National University, The Australian National University and The Brookings Institution

While the number of patients affected by the SARS coronavirus and its broader impact on the global public health community have been surveyed in considerable detail, the consequences of the disease in other areas are less well calibrated. The purpose of this paper is to provide an assessment of the global economic costs of SARS. Our empirical estimates of the economic effects of the SARS epidemic are based on a global model called the G-Cubed (Asia-Pacific) model. Most previous studies on the economic effects of epidemics focus on the economic costs deriving from disease-associated medical costs or forgone incomes as a result of the disease-related morbidity and mortality. However, the direct consequences of the SARS epidemic in terms of medical expenditures or demographic effects seem to be rather small, particularly when compared to other major epidemics such as HIV/AIDS or malaria. A few recent studies—including Chou et al. (2003), Siu and Wong (2003), and Wen (2003)—provide some estimates on the economic effects of SARS on individual Asian regions such as mainland China, Hong Kong (SAR), and Taiwan. But these studies focus mostly

*  

This paper is adapted from an article that will appear later this year in Asian Economic Papers (MIT Press). An earlier version of the paper was originally presented to the Asian Economic Panel meeting held in Tokyo, May 11–12, 2003, and the Pacific Economic Cooperation Council (PECC) finance forum, Hua Hin, Thailand, July 8–9, 2003. We have updated that original paper to include the last known case of SARS as well as adjusting the scale of some shocks given the knowledge that the SARS epidemic lasted approximately 6 months rather than the full year originally assumed. The authors particularly thank Andrew Stoeckel for interesting discussions and many participants at the conferences, particularly Ifzal Ali, Richard Dorbnick, George Von Furstenberg, Yung Chul Park, Jeffrey Sachs, Wing Thye Woo, and Zhang Wei for helpful comments. Alison Stegman provided excellent research assistance and Kang Tan provided helpful data. See also the preliminary results and links to the model documentation at http://www.economicscenarios.com. The views expressed in the paper are those of the authors and should not be interpreted as reflecting the views of the institutions with which the authors are affiliated, including the trustees, officers, or other staff of the Brookings Institution.



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