Does Trade Liberalization Improve Public Health? The Effect of Free Trade Agreements and Multilateralism in Pharmaceutical Sector in India

Abstract

Despite several economic reforms in India post-1991, millions of Indian households do not have access to drugs because they lack purchasing power or public health facilities. The present article critically examines the potential public health implication of trade liberalization to facilitate access to a variety of good quality drugs at affordable costs. Using the partial equilibrium model, the article suggests that multilateralism and free trade agreements (FTAs) both have a positive impact on welfare gains, consumer surplus, and trade volume in pharmaceutical industries in India. However, the study found that multilateralism is clearly associated with improved human welfare, particularly health. Multilateral trade liberalization should, therefore, be viewed in terms of its wider socioeconomic impact, rather than through the narrow lens of country-specific FTAs.