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Fridays Academy: Health, Poverty Reduction and Economic Growth

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As usual on Fridays, from Raj Nallari and Breda Griffith's lecture notes on Economic Policies for Poverty Reduction.

 

Health, Poverty Reduction and Economic Growth

 

The opportunity to receive basic health care is a critical component of personal development as well as a key factor for economic progress (Sen, 1999) and is a basic human right that is protected by international law.  Yet for millions of the world’s poor this basic right remains out of reach. Developing countries account for 90 percent of the world’s disease burden (Gottret and Schieber, 2006). Roughly, 16 million deaths in 1998 were directly attributable to communicable diseases such as HIV/AIDS, malaria, tuberculosis, and maternal and prenatal conditions, childhood infections, tobacco-related illnesses and nutritional deficiencies (WHO, 2006).  Almost 11 million children under age 5, mostly in developing countries died from diseases in 2000—8 million of these were infants, half of whom were just 1-month old or less. Yet the diseases are treatable and technologies exist to prevent deaths.  The cost in terms of economic growth, stability, increasing poverty and pushing the poor further into poverty is increasingly being acknowledged as unjust and being acted upon at the international level.  The international community’s commitment to the Millennium Development Goals, three of which are directly related to health, attest to international acceptance that investment in health is vital to human development and economic growth.  

 

This and upcoming Fridays we will examine health within a macroeconomic context and the current status of development assistance for health.

 

Macroeconomics and Health

Placing health within a macroeconomic framework has been a recent phenomenon in developing economies.  Critics of the old structural adjustment facility, the SAF, noted its lack of emphasis on health in programs that targeted macroeconomic adjustment and structural reforms. The increasing emphasis on poverty reduction by the international financial community in recent years has, however, recognized the role of health for economic growth and development. Initiatives such as the PRSP in 1999 and the HIPC Initiative now recognize the importance of health to poverty outcomes in developing economies.  The World Health Organization’s “Commission on Macroeconomics and Health” was set up to analyze the impact of health on development by examining the ways in which investment in health could tackle mass premature death and thereby improve economic development.  Furthermore, the move in recent years to global initiatives tackling health concerns—Global Alliance for Vaccines and Immunizations (GAVI), the Global Fund for AIDS, TB and Malaria—underlies the critical relationship between health, poverty reduction and economic growth.  In addition, as outlined above, health issues occupy three of the Millennium Development Goals and contribute to the achievement of all the others.

 

The disparity in health indicators among the various country development categories is stark, as shown in the exhibit below.  The population in the least developed countries and in lower-middle income group in which many of the world’s poor live (e.g., India, China) was approximately 3.3 billion in 2003. An individual born in a least developed country can expect to live only to the age of 51 compared to 78 in a high-income country.  The health indicators for Sub-Saharan Africa have worsened dramatically over the study period. Life expectancy at birth has fallen from 51 to 46 years of age and infant mortality deaths before the age of 1 per 1000 live births have increased from 92 to 101. Under five mortality rates have likewise worsened in Sub-Saharan Africa from 151 to 171 per 1000 live births. By contrast, life expectancy has improved or remained constant for the remaining country groupings, as have mortality rates.    

 

Life Expectancy and Mortality Rates by Country Development Category (1995-2000) and 2003

 


health2

            Note:      CMH1 data refer to a year between 1995 to 2000

                * data are for 2002

Source:   Commission on Macroeconomics and Health, 2001and updated for 2003 (2002*) using World Development Indicators.

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