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Public-Private Partnership, Marketization of Foreign Aid

PARK, Eunice

Ewha Womans University

Graduate School of International Studies

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Table of Contents

I. Introduction

II. Literature Review

i. Enhancement of Aid Effectiveness

ii. Market Mechanism (Public-Private Partnership) in Health

iii. Theoretical Framework

III. Methodology and Research Design

IV. Empirical Analysis

i. Historical Background on Development of GAVI

ii. Market Mechanism in GAVI

iii. Comparison among EPI, CVI, and GAVI

V. Conclusion

Reference

Annex A. Gross national income per capita 2009, Atlas method and PPP

Annex B. Guidelines for Applications

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I. Introduction

The 1990s were a critical period of time regarding the issue of global public-private

partnerships (GPPP). Several initiatives involving collaboration across sectors arose with an

objective of overcoming “failures” of the market and “ineffectiveness” of public health

services. A global approach of public-private partnerships (PPP) for health development had

been counted as a new solution to the problem of health service provision to the world,

especially to the disadvantaged population (Reich 2002). With continued discussion on aid

effectiveness in the 2000s through several high-level forums, PPPs are more commonly

found in various foreign assistance programs and projects. The private sector involving in the

public services brings the market mechanism into the field. One example of GPPP is the

Global Alliance for Vaccines and Immunisation (GAVI), incorporating key agencies and

institutions involved in immunization and development.

With continued discussion on the significance of PPP, several researches have been

done to review the historical background, investigate the logic, and evaluate the effectiveness.

Nonetheless, previous researches have limitations in comparative analysis for effectiveness

evaluation. To overcome the limitations of the previous works, the case of GAVI and the

former approaches of public services and attempts for PPP regarding vaccine and

immunization are reviewed in this piece of research. To investigate the operation mechanism

of GAVI and compare, there are questions to be asked. (1) What operation mechanism of

GAVI reflects market mechanism? (2) Is the market mechanism in public services (in this

case, PPP) more effective than the public services provided only by the public sector? It is

argued in this paper that critical operation mechanisms are based on market mechanism and

that it led to greater effectiveness in comparison to previous health program delivered without

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the private sector.

Justification of this research is its implications derived from a case, GAVI, in

discussion of market mechanism in public service and enhanced aid effectiveness. Measuring

the operation mechanism of GAVI and implying greater effectiveness are expected to shed

light on the future projects and programs for better effectiveness of similar projects.

II. Literature Review

i. Enhancement of Aid Effectiveness

Debate on Development and Aid Effectiveness

Whether foreign aid has been fostering development in developing countries is one

of the most compelling notions in our time and society. Jeffrey Sachs is a renowned

economist who has positive outlook on eradication of poverty. In his book, The End of

Poverty, extreme poverty - defined as incomes of less than 1 dollar per day by the World

Bank - can be eliminated globally with well-planned development aid (Sachs 2005). On the

other hand, William Easterly is highly skeptical towards the current trends of foreign aid. In

his book, The White Man’s Burden, he points out the possible flaws at the local level and how

ineffective the aid is being used (Easterly 2006). Dambisa Moyo also has doubts in the

current system of aid. In her book, Dead Aid: Why Aid is Not Working and How There is a

Better Way for Africa, she exposes the inconvenient truth of aid’s fostering of dependency,

encouraging corruption, and perpetuating poor governance and poverty (Moyo 2009). Peter

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Boone is also critical about the current status, viewing the history of large aid flow as to date,

a major failure (Boone 2005).

Enhancement of Aid Effectiveness

To move on from the aid “failures”, various scholars are putting emphasis on the

enhancement of aid effectiveness. On top of Sachs’ emphasis on more aid from the donor

countries, operation mechanisms are often called for change. Easterly puts emphasis on the

role of donors as “searchers” than “planners” who consider the local circumstances of

developing countries (Easterly 2006). He argues how top-down approach has failed and thus,

bottom-up approach should be pursued as an alternative for enhanced aid effectiveness.

Boone asserts that to have a real impact on extreme poverty, aid needs to be much more

carefully targeted, allocated on the basis of good scientific evidence of its effectiveness and

delivered through well-designed institutions (Boone 2005).

As a means to enhance aid effectiveness, private sector has been considered since the

Monterrey Consensus in 2002. Especially for financing for development (FfD), new

development partnership based on a framework of mutual accountability arose with urgent

need for enhanced collaboration among all stake holders to promote sustained economic

growth (UN 2002). In 2004, the United Nations Development Programme (UNDP) published

Unleashing Entrepreneurship - Making Business Work for the Poor, providing implications of

importance of the private sector engagement, recommending the major actors to modify

actions and approaches to enhance the ability of the private sector to advance the

development process (UNDP 2004).

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ii. Market Mechanism (Public-Private Partnership) in Health

Definitions of Public-Private Partnership

Tang, Shen, and Cheng (2009) discuss how the European Union (EU) created a new

focus on private-sector involvement (PSI) in 2005 to assist the government in meetings its

priorities, building on the clear recognition that public funds are limited. They distinguish the

PSI into two forms of outsourcing and PPPs (Tang, Shen, and Cheng 2009). Most literature

deals with PPPs in terms of domestic partnership. Discussion on domestic PPPs in this paper

is limited to the debate in the U.S. Yet, it is certainly relevant to PPPs in other countries and

global partnerships. The biggest difference is the actors and the scope of implementation of

the PPP projects. Whereas domestic PPPs are between the government and the private sector

within a country, GPPPs are among more actors including international organizations, states,

and the private sector in the global community, across national borders.

Emergence of Public-Private Partnership in Health

Several organizations in public health established partnerships with private sector

organizations around the year 2000. When the market fails to distribute health benefits to

people who need them– especially to people in developing countries– partnerships between

public and private organizations are often seen as offering an innovative method with a good

chance of producing the desired outcomes (Reich 2002). Despite the fact that PPPs do have

problems, the reason why they became prominent is mainly due to rising advocacy for public

health problems to be solved by non-governmental organizations in the international policy

agenda (Reich 2002).

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There has been a historical change over time. Weaver and Dennert (1987) refer to the

1930s when local economic development was a national concern for policymakers. There

were assessments of the role of metropolitan areas in the national economy, and policymakers

tried to generate urban-based jobs for the unemployed. During the 1950s and 1960s, they say

that economic growth and development became the central preoccupation of a new

generation of economists and planners who defined economic development as a matter for

national macroeconomic policy. Until late 1970s, there had been minimal collaboration

between public and private sectors within the UN or the international development system

(Buse and Walt 2000a). In the 1970s and 1980s, relationships began to change with more

donors seeking collaborators from the private sector.

Yet, it was not until the 1990s that a number of changes occurred in the context of

international cooperation for health. Radelet and Levine (2007) viewed the early 1990s, when

the cold war ended, as the time when many foreign aid programs lost their reasons and much

of their political support and encountered increasing criticisms. In response to the criticisms,

donors sought changes, and the most radical and dramatic cases were the establishment of

new institutions such as GAVI to deliver aid in fundamentally different ways than traditional

agencies (Radelet and Levine 2007). The importance of global collaboration among different

agencies is stressed in the Initiative for Vaccine Research (IVR) R&D report of 2005, which

says "the global control of infectious diseases requires global and continuous collaboration,

coordination of regulatory agencies and development of vaccines to prevent all diseases, as

well as a sustainable economic system to support these initiatives."

Advantages and Disadvantages of Public-Private Partnership

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There are literatures both for and against PPP. Yet, most literatures evaluate PPP

based on the potential benefits and costs rather than either strongly supporting or criticizing

PPP. Nonetheless, literatures supporting PPP focus on the benefits that derive from its

efficiency and financial stability. On the other hand, literatures against PPP focus on the risks

that derive from complexity, the nature of PPP projects, in comparison to either the public or

private sector working alone.

One of the advantages of PPP is that it saves resources. Fiscal problems of the state

that can be mobilized by private funding for public services alongside the significant changes

expected to be made (Bovaird 2004). Bovaird points to positive future prospects, referring to

evidence that many companies while continuing to be profit-oriented are interested in, and

even committed to, taking the corporate social responsibility aspects of their activities more

seriously. It improves provided services and generates revenue or other indirect financial

benefits.

PPP can also be time-efficient in the procurement process, consolidating many

activities into a single solicitation(Little 2011). For instance, instead of arranging financing,

hiring a designer, soliciting construction bids, overseeing construction of the project, and

ensuring maintenance and repair over its life cycle, a PPP requires only the identification and

retention of a qualified entity or team that can provide the package of services in need (Little

2011).

Regardless of the benefits deriving from PPP, there are risks and costs to be

considered. There may be substantial political and democratic costs in addition to the benefits

of efficiency and service improvements in some policy areas (Flinder 2005). Flinder

concludes with more weight on the concerns from possible risks that the state has to consider

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when introducing PPPs, based on evaluation of a number of PPPs with efficiency, risk,

complexity, accountability, and governance. Problems like high costs in tendering, complex

negotiation, cost restraints on innovation and differences on conflicting objects among the

project stakeholders (Li, Akyntoye, Edwards, and Hardcastle 2005).

Much of the risk of a PPP project comes from the complexity of the arrangement

itself in terms of documentation, financing, taxation, technical details, sub-agreements and

etc. involved in a major infrastructure venture, while the nature of the risk changes over the

duration of the project (Grimsey and Lewis 2000). The range of risks can be usefully divided

into five categories: construction risk (related to design problems, building cost overruns, and

project delays); financial risk (related to variability in interest rates, exchange rates, and other

factors affecting financing costs); performance risk (related to the availability of an asset, and

the continuity and quality of service provision); demand risk (related to the ongoing need for

services); and residual value risk (related to the future market price of an asset) (IMF 2004).

Yet, these risks are not unique to PPP projects, but rather present in all public, private, and

PPP projects. Since there is a limited scope of parts where PPPs are concentrated on, the risks

of PPPs tend to have certain characteristics, though overlapping with for both public and

private projects.

Successful and Sustainable Public-Private Partnership

For a PPP project to be considered successful and sustainable, there are some

conditions to be met (Kanakoudis, Papotis, Sanopoulos, and Gkoutzios 2007). First, it should

be based on formation of strong partnership. Second, it should be publicly accepted. Third,

the management should be transferred from public to private sector. Last, meritocracy should

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be guaranteed along with performance evaluation during the contract procedures.

Several literatures point out some critical success factors in PPP. Considering

political structure or environment, good governance (Frilet 1997) and government support

(Zhang, Wang, Tiong, Ting, and Ashley 1998) are identified. Sound economic policy, such as

available financing market (McCarthy and Tiong 1991) and effective risk allocation (Grant

1996). "Soft critical factors" like social support (Frilet 1997), commitment (Stonehouse,

Hudson, and O’Keefe 1996), and mutual benefit (Grant 1997) as the success factors for PPP

projects.

iii. Theoretical Framework

The research questions in this paper are to analyze the market mechanism found in

the GAVI operation mechanism and indicate the enhanced effectiveness of vaccination

projects that began in 1974, when WHO initiated The Expanded Programme on

Immunization (EPI). Questions are as follows: (1) What operation mechanism of GAVI

reflects market mechanism? (2) Is the market mechanism more effective in comparison to

public services?

Based on the literature review, an analytical framework has been extracted to discuss

the market mechanisms in GAVI in its supply of health services based on demands and its

financial system. Details indicate how GAVI has adapted market mechanism into its

operations and have been relatively more successful considering its paths. Based on the

market mechanism of GAVI, the coverage of five major vaccines – Hepatitis B vaccine (hepb

3), Hib vaccine (hib 3), Measles (MCV), and Diphtheria Tetanus and Pertussis (DTP)

vaccines (DTP 1 and DTP 3) – supported by GAVI are measured in the year span of from

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1980 to 2011, dividing the period into pre-GAVI and post-GAVI at the year 2000 to show

improvement in effectiveness.

III. Methodology and Research Design

This research paper is designed for a discussion on PPP with a case study, based on a

qualitative approach. It first overviews the historical context of development of GAVI,

analyzes the market mechanism (demand and supply matching and financing system) within

GAVI, and compare EPI, CVI, and GAVI in terms of conditions and effectiveness.

All information on GAVI, the International Finance Facility for Immunisation

(IFFIm), and EPI (WHO) is extracted from their websites. 1 Statistical data are from OECD

Statistics, World Bank Statistics, and WHO Statistics. 2

IV. Empirical Analysis

i. Historical Background on Development of GAVI

The Expanded Programmes on Immunization (EPI)

EPI, a WHO project was initiated in 1974 and established in 1977 through a World

1 GAVI http://www.gavialliance.org/ ; EPI (WHO) http://www.who.int/ ; IFFIm http://www.iffim.org/

2 OECD Statistics http://stats.oecd.org/ ; World Bank Statistics http://data.worldbank.org/ ;

WHO Statics on Immunization Coverage http://www.who.int/immunization_monitoring/data/en/

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Health Assembly resolution to ensure that all children in all countries benefited from life-

saving vaccines, targeting diphtheria, whooping cough, tetanus, measles, poliomyelitis and

tuberculosis. When the programme began, the disease still threatened 60% of the world's

population and killed every fourth victim, but EPI successfully increased immunization in

developing countries. Accessibility to vaccination is almost universal, as evidenced by 95%

coverage of BCG (Bacillus Calmette-Guérin, a vaccine against tuberculosis)–the first

vaccination after birth. Significant gaps remain, however, in achieving full vaccination at the

right age and intervals (UNICEF Bangladesh 2008).

During the 1980s, however, results were faltering with significantly dropping

coverage in many countries. Moreover, Hepatitis B vaccine, which was relatively inexpensive,

was not being taken up by developing country governments as part of their immunization

programs, with an estimated 30 million children not getting their basic immunizations, which

could have prevented millions of deaths (Chee, Molldrem, Hsi, and Chankova 2008). Global

progress on MCV (Measles-containing vaccine) coverage and DTP3 (Diphtheria-tetanus-

pertussis) immunization coverage indicates how the immunization coverage has changed over

time.

The Children’s Vaccine Initiative (CVI)

Aware of the problems derived from EPI and the limitation of a program only run by

public sector, the immunization community came up with an alternative, CVI. Unlike EPI,

CVI was a PPP project that brought together all the major participants in the international

health community – scientists, national and international health bureaucrats, foreign aid

donors, and the International Federation of Pharmaceutical Manufacturers Associations

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(IFPMA) (Muraskin 2002). The partners involved in CVI were WHO, UNICEF, UNDP,

World Bank, Rockefeller Foundation, and vaccine manufacturers involved at the Task Force

Level and Product Development Team (Buse and Walt 2000b).

Yet, the CVI failed to make major progress because of unresolved issues among the

partner organizations (between the public and private sectors) and lack of sustainable funding

(Chee, Molldrem, Hsi, and Chankova 2008).First of all, bringing members of the public and

private sectors together was a challenge for CVI. While the public health, both national and

international, viewed their work as a calling to benefit mankind, especially taking the

advantage of vaccines, the private sector had a totally different approach: focusing on the

search for profit especially based on intellectual property rights (IPRs) (Muraskin 2002).

IFPMA was given the second ranking position in the task force of secretary, one of CVI’s

leading proponents of private-public cooperation (Muraskin).

Moreover, lack of sustainable funding was another critical problem. A working group

of representatives from UNICEF, WHO, the World Bank, the Rockefeller Foundation, and

industry was set up, to develop proposals, but the resulting plan lacked detail, human capital,

and financial capital. Due to unresolved problems, however; WHO announced that the CVI

would be dismantled and terminated by the end of the year, just before the high-level meeting

for discussion on official launching of CVI (Milstien, Kamara, Lydon, Mitchell, and

Landry2008). Without a specific plan afterwards, everything went back to the initial stage of

WHO-oriented EPI, with a break-up of the effort for a global alliance for children’s

vaccination.

However, CVI is not simply considered as a failure but rather a stepping stone for the

long attempts to be realized through GAVI. The descending entity GAVI is largely based on

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CVI in terms of main objectives and goals, structure, actors involved, etc. Failed compromise

in CVI eventually led to another motivation for a global alliance.

The Global Alliance on Vaccine and Immunisation (GAVI)

The international community has established a business model that not only finances

the introduction of new vaccines in developing countries, but also reshapes the vaccine

market through GAVI. Launched in 2000, GAVI is a public-private global health partnership

of developing countries, donor countries, multilateral organizations, vaccine industry, and

civil society under a common mission of commitment to saving children’s lives and

protecting health by increasing access to immunization in developing countries.

GAVI’s Board is composed of WHO, UNICEF, the World Bank, the Bill & Melinda

Gates Foundation, governments of donor governments and developing countries, research

and technical health institutes, the vaccine industry of industrialized countries and developing

countries, civil society organizations, and some independent individuals. The first Board

Chair of GAVI was Dr. Gro Harlem Brundtl and from WHO who set goals of 1) improve

vaccine infrastructure in low-income countries; 2) help poorer countries procure vaccines

against hepatitis B (hep B), Haemophilus influenza type B (Hib), yellow fever and safe

injection equipment; and 3) secure research and development financings for diseases

prevalent in poor countries.

GAVI is funded by governments, corporations, foundations, and private individuals;

76% of GAVI’s funding comes from governments and 24% comes from the private sector.

GAVI’s donors vary from governments of developed countries to civil society organizations

and philanthropic foundations. GAVI aims to focus its support on the least developed

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countries (LDCs) in the world. Thus, it provides a list of countries eligible for GAVI support

based on GNI per capita below or equal to 1,520 USD (according to the World Bank data

available for the latest year) and conditions for different types of support in relation to the

proposals of the country and qualifications. GAVI has been contributing to a rise in the

number of children immunized, reducing the cost of a child’s immunization and saving

millions of lives from deadly diseases by supporting development of new and underused

vaccines, immunization services, health systems funding platform, health system

strengthening, and civil society organizations.

ii. Market Mechanism in GAVI

Demand and Supply Match

At the core of market mechanism lays an economic model of supply and demand.

GAVI is providing vaccines to developing countries based on the needs of the recipients. It is

clearly an ideal approach that has moved away from the long history of donor-oriented aids.

GAVI first provides a list of countries eligible for the support based on GNI per capita below

or equal to 1,520 USD according to the World Bank data available for the latest year. (See

Annex A. Gross national income per capita 2009, Atlas method and PPP.) Then, they set

conditions for different types of support in relation to the proposals of the country and

qualifications. Currently, there are 57 eligible countries and 16 countries have recently

graduated.

After setting the conditions and limitations, GAVI opens the support application to

all eligible countries so they can seek for what they are in need of with ownership. There are

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detailed conditions and policies requiring the developing countries to be conscious about and

report on. (See Annex B. Guidelines for Applications.) In 2012, two more modalities (the

Funding Request Template and the Common Proposal Form) of funding for Health Systems

Strengthening (HSS) have been introduced for the recipient countries to have more flexibility,

ownership, and autonomy in programming GAVI support in accordance to their own needs

and to maximize the impact of their HSS funding and activities. The Health Systems Funding

Platform (the Platform) aims to improve the way external funders support countries to

strengthen their health systems, in alignment with national plans.

By pooling the demand from developing countries for new and underused vaccines

and providing long-term, predictable financing to meet the demands from recipient countries,

GAVI’s objective to create a healthy vaccine market affordable for all is realizing. It not only

helps attract new vaccine manufacturers, including an increasing number of suppliers based

in emerging markets, but increases healthy competition and, as a result, drives vaccine prices

down. It is positively forecasted that is the key to achieving GAVI’s mission on healthy

vaccine market, providing sufficient supply of high quality, appropriate vaccines at low and

sustainable prices. GAVI’s initial impact is evidenced by the changing production and supply

base. Price drops of hepatitis B monovalent vaccines – from USD 0.56 in 2000 to USD 0.18

in 2010 per dose – and hib-containing, as well as rotavirus and HPV vaccines illustrate how

such algorithm can eventually influence the entire vaccine market (Chee, Molldrem, Hsi, and

Chankova 2008).

Financing through IFFIm

How GAVI is funded is rather unique and sustainable. It is quite heavily relying on

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private sector, hoping to overcome the historic limitations to development funding for

immunization. 37% of the GAVI’s funding from 2000 to 2010 by proceeds is from innovative

finance, like IFFIm and the Advance Market Commitment (AMC). 63% of the funding is

direct contributions, including grants and agreements from donor governments, and personal

and private sector philanthropy facilitated by the GAVI Campaign.

The International Finance Facility for Immunisation (IFFIm) was set up in 2006 to

rapidly accelerate the availability and predictability of funds for GAVI's immunization

programs based on long-term pledges from donor governments to sell something called

‘vaccine bonds’ in the capital markets, making large volumes of funds immediately available

for GAVI programs. The World Bank serves as Treasury manager and IFFIm funds GAVI for

program implementation (Figure 1).

Figure 1. Operation Logic of IFFIm

IFFIm has transformed GAVI’s financial landscape, nearly doubling GAVI’s funding.

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It benefits from USD 6.3 billion in donor contributions over 23 years from the governments

of the United Kingdom, France, Italy, Norway, Australia, Spain, The Netherlands, Sweden

and South Africa. Their long-term pledges support the issuance of vaccine bonds, which have

been issued in various markets - from London 2006 to Tokyo in 2010, – and proved

remarkably popular with institutional and individual investors who want a market-based

return and an ethical investment opportunity (Table 1 and Figure 2). IFFIm has been rated

AAA/Aaa/AA+ by FitchRatings, Moody's Investor Service and Standard & Poor's based

principally on: the high credit quality of its donors and their legally binding commitments; its

politically compelling mandate to support immunization and vaccination in developing

countries; its conservative financial policies and financial and risk management by the World

Bank.

Table 1. Donors’ Grant Agreement

Country Amount Committed

USD Equivalent Currency of Pledge

United Kingdom USD 2,980 mil. (over 23 years) GBP 1,630 mil.

France USD 1,719 mil. (over 20 years) EUR 1,239.96 mil.

Italy USD 635 mil. (over 20 years) EUR 498.95 mil.

Norway USD 264 mil. (over 15 years) USD 27 mil. & NOK 1,500 mil.

Australia USD 256 mil. (over 20 years) AUD 250 mil.

Spain USD 240 mil. (over 20 years) EUR 189.50 mil.

The Netherlands USD 114 mil. (over 8 years) EUR 80 mil.

Sweden USD 38 mil. (over 15 years) SEK 276.15 mil.

South Africa USD 20 mil. (over 20 years) USD 20 mil.

Source: IFFIm, 2012

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Figure 2. Donors’ Grant Agreements

iii. Comparison among EPI, CVI, and GAVI

To compare and contrast EPI, CVI, and GAVI, the conditions to be met for successful

PPP have been reviewed. The conditions for a PPP project to be considered successful and

sustainable and the critical success factors in PPP have been evaluated. According to the

conditions for successful and sustainable PPP, GAVI can be viewed as a successful case and

GAVI indicatively has the concerned success factors. For additional measurement of

effectiveness, vaccine coverage of selection of five major vaccines supported by GAVI has

been elaborated in detail. Moreover, the vaccine coverage tracking shows how the global

vaccine coverage has improved since GAVI had been founded.

Successful and Sustainable PPP

For a PPP project to be considered successful and sustainable, it should 1) be based

on formation of strong partnership, 2) be publicly accepted, 3) have its management

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transferred from public to private sector, and 4) guarantee meritocracy along with

performance evaluation during the contract procedures.

Table 2. Successful and Sustainable PPP

EPI CVI GAVI

(Strong) Partnership Not applied Weak Strong

Publicly Accepted Yes Yes Yes

Management Transferred Not applied No Yes

Meritocracy Yes Yes Yes

Considering the four main conditions for a successful and sustainable partnership,

EPI, CVI, and GAVI similarly were publicly accepted and operated based on meritocracy. Yet,

they differed in terms of strong partnership and transferred management. EPI does not apply

for both conditions since only the public sector provided services. CVI failed due to weak

partnership and that management could not have been transferred. GAVI, on the other hand,

was based on strong partnership among the actors from both public and private sectors and

that management had been transferred to the non-public sector. GAVI adopted the structure

from the public sector such as WHO and UNICEF, and transferred the other management to

the newly established body and the other actors. Thus, GAVI can be viewed as a successful

case.

PPP Success Factors

For a PPP project to be successful, there are some critical success factors. 1) Good

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governance, 2) government support, 3) Sound economic policy, such as available financing

market, 4) effective risk allocation, 5) social support, 6) commitment, and 7) mutual benefit

are considered as the success factors for PPP projects.

Table 3. PPP Success Factors

EPI CVI GAVI

Good Governance Yes Yes Yes

Government Support Yes Yes Yes

Economic Policy (Availability of Financial market)

No No Yes

Effective Risk Allocation Not Applied Not Applied Yes

Social Support Yes Yes Yes

Commitment Yes No Yes

Mutual Benefit Not Applied Partially Yes Yes

Considering the seven critical success factors for a PPP project, EPI, CVI, and GAVI

all have good governance, government support, and social support. Though it is difficult to

evaluate on CVI due to lack of actual performance coming from failure, it is presumed to

have good governance, government support from the donor partner countries, and social

support that EPI had had previously. Nonetheless, GAVI evidently is different from EPI and

CVI in terms of economic policy, especially on access to financial market. GAVI also had

effective risk allocation, which were neither quite applied to EPI for its public sector-oriented

projects nor CVI for its failure in the initial stage. EPI and GAVI both had strong

commitment based on their objective though CVI could not continue with its initiative. GAVI

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has strong mutual benefits among stakeholders while EPI does not apply due to absence of

partnership. CVI seemed to have mutual benefit in the beginning but eventually failed to

meet a consensus, which indicates lack of mutual benefit. Hence, GAVI can be evaluated as a

PPP that has the success factors, unlike the previous approaches of EPI and CVI.

Vaccine Coverage

To measure and compare effectiveness of EPI and GAVI’s vaccine provision

programs, vaccine coverage is significant. The coverage of selection of five major vaccines

supported by GAVI – Hepatitis B vaccine (hepb 3), Hib vaccine (hib 3), Measles (MCV), and

Diphtheria Tetanus and Pertussis (DTP) vaccines (DTP 1 and DTP 3) – has been elaborated in

detail. The year span is from 1980 to 2011 which will be divided into pre-GAVI and post-

GAVI at the year 2000 to show improvement in effectiveness for analysis.

0

10

20

30

40

50

60

70

80

90

100

1980 1984 1988 1992 1996 2000 2004 2008

hep B

Hib3

MCV

DTP1

DTP3

GAVI

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Figure 3. WHO-UNICEF Estimates of Vaccine Coverage 3

According to WHO-UNICEF estimates, global vaccine coverage has been increasing

in general. The coverage constantly rose from 1980 to 1990, thanks to WHO who initiated

EPI. It was not too difficult to pull up the coverage from very low coverage of 10-30% and

up. However, in the 1990s, the coverage increase stopped and began to drop, except for Hib

vaccine which was not provided at all until 1992. With the establishment of GAVI in 2000,

the coverage began to increase again. Hib vaccine coverage rose up to 40% in 2010.

Considering the fact that it is difficult to pull up the coverage as it gets higher, GAVI can be

viewed as a program with greater effectiveness, in comparison to vaccine provision by the

public sector, WHO, from 1980 to 1990. The vaccine coverage tracking distinctively shows

how the global vaccine coverage has improved since GAVI had been founded, overcoming

the stagnation found during the 1990s.

V. Conclusion

This research paper has examined the market mechanism in health services (vaccine

provision) and its effectiveness with the case of GAVI. PPP is an alternative approach to the

problems and failures that arose from public sector-only programs in the 1990s.

GAVI clearly had adopted market mechanisms in its operations which showed

greater effectiveness and success in comparison to the public sector’s vaccine provision. Also,

3 WHO-UNICCEF Estimates (as of July 2012)

http://apps.who.int/immunization_monitoring/en/globalsummary/timeseries/tswucoveragerota_last.htm#

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GAVI clearly had the success factors for PPP. Especially, the coverage of five major vaccines

supported by GAVI has been increasing, regardless of the already-high coverage of around

70-80%.

Discussion of market mechanism in public service and enhanced aid effectiveness

can be drawn from this research, implying that public services in collaboration with private

sector has a fine chance of turning out to be a success. Special concerns on the needs of the

partner countries and the innovative financing measures of GAVI are likely to be applied in

similar programs and projects that can involve both public and private sectors. Especially the

social interest bonds that IFFIm is issuing can be developed further under the concept of

social finance sectors.

Enhancing aid effectiveness has been an unresolved problem in the field of

development for a long time. Involving other actors and innovating the market may be a bold

but a reasonably realistic way to stepping forward to a better future.

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