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Is unfettered globalization good for health? evidence and a simulation exercize

Is unfettered globalization good for health? evidence and a simulation exercize. by Giovanni Andrea Cornia Unicef Training Seminars, 28-XI-2007 ------------------------------------------------------------- Contents - Mortality trends

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Is unfettered globalization good for health? evidence and a simulation exercize

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  1. Is unfettered globalization good for health? evidence and a simulation exercize by Giovanni Andrea Cornia Unicef Training Seminars, 28-XI-2007 ------------------------------------------------------------- Contents - Mortality trends - Mortality models - Changes in determinants of mortality - Estimation of an econometric model of Life Expectancy at Birth (LEB) - Simulation of LEB assuming determinants of health behaved as during 1960-85 - Relation between liberalization-globalization reforms &the determinants of health ? -Conclusions

  2. 1.A slow down in the rate of decline of (100-LEB) over 1960-04

  3. 2.Long term mortality models • Material deprivation pathway (McKeon) • Technical progress in health (Preston, Deaton) • Acute psychosocial stress (Cornia-Paniccià) • Lifestyles (Murray) • Inequality and hierarchy (Wilkinson, Marmot)

  4. (i) material deprivation pathway • income/c,  improved nutrition, housing, access to private health care. Relation is concave, above 5000$PPP only small gains in LEB (Preston). • Particularly at low income, instability (in absence of insurance/credit mkt) reduce LEB • Income inequality reduces LEB (above Gini of 40 ?, 50?) • concavity relation between GDP/c-health (Preston), reduced income growth • Income inequality health inequality • Rises in relative prices of basic goods (food, fuel, drugs) (Pb/CPI) • Human capital of family members, esp women. (38% of drop in IMR due to gains in female education ) (diffusion of health knowledge, better use of family income, lower fertility • Demographic factors: (birth spacing, dependency ratio, incomplete families, migrants) • Public expenditure on health care and its distribution, and health financing models • Environmental contamination (air, water, soil, vector)  increases risk

  5. Child wellbeing by level of education of mother (Azerbadjan 2007)

  6. (ii) Technical progress in health • Material resources are not so important (Preston) • Explain only 15 % of LEB rises over 1930-60. • Technology explains 45% of IMR gains • Income and education are important but …. as instruments • public health interventions to spread health technology • Improved environmental (malaria spraying) + water systems, • ‘germs theory of disease’ (end 19th cent.) vaccines • Antibiotics  TBC • Neonatal technologies • Health knowledge and drugs against diseases (cvd/cancer) • Aids and antiretroviral

  7. Technical Progress in health and LEB Sources: Penn-World Tables Mark 5.6., DESIPA database, HFA/Euro Database Note: The computed values of life expectancy at birth for 1990-4, 1974-9 and 1960-4 are estimates values based on a quantile (99th percentile) regression

  8. (iii) Psychosocial stress pathway deaths due to CVD & violent causes • Stress is the condition that results when person/environment transactions lead the individual to perceive a discrepancy between the demands of the situation and resources of the person's biological, psychological or social systems. • Socio-economic ‘acute’ stressors include: • Unexpected rises in unemployment, unstable jobs, wage arrears-drops • Large/sudden changes in income inequality (reduce social cohesion, control of deviant behavior, raise crime, insecurity, personal isolation, sense of frustration) • Income instability and other forms of instability • Rising insecurity • Social re-ranking, especially if underserved • Changes in personal circumstances (divorce, widow, migration)

  9. Stress (index) and changes in LEB 1989-94 in 12 Russian regions

  10. (iv) Unhealthy lifestyles (deaths for chronic and degenerative diseases) • Health knowledge is key: but it accumulates slowly (role of education), long time lags between ‘bad lifestyle’ and mortality (complicates testing) • Smoking/drug incidence • Drinking and drinking pattern • Dietary factors • Lack of exercise

  11. (v) income inequality, hierarchy, disintegration • Whitehall study on mortality of British civil servants: • sense of relative deprivation (Townsend) • Sense of personal isolation (collapse of social structures – community) • loss of social cohesion which (in the presence of with weak state) --> • reduces control of deviant health behavior • reduces crime control, increases insecurity, violent deaths • increases social hierarchy and reduces latitude/control at work • sense of frustration • inequality in health care (via divergence of interest, and lower taxation) • residential segregation (reduces ability to undertake collective action)

  12. 3.Changes in the determinants of health, 1980-2005 (all 5 models)(i) Slower growth of GDP/c • Over 1985-2005 growth is slower than in 1960-80 • Low-middle income countries much affected • Important exceptions (China, India, VN) • Signs of some limited GDP recovery over 2000-5 ? • China-India-VN continued growth • Growth rebound in EE/FSU (FDI-oil prices-remittances) • Africa’s growth led by exp of raw materials to China • Japan’s return to growth

  13. (ii) Rising volatility in mid income countries Standard deviation of GDP/c growth rate, mean by country groups, 1960-2005 1960-70 1970-81 1982-90 1990-2005 Low income 4.96 6.32 4.95 4.58 Middle income 2.77 3.48 4.44 5.62 High income 1.93 2.69 1.91 2.58 Major factor of increasing volatility are financial crises

  14. Rising number of financial crises

  15. (iii) Inequality rises over 1960s-early 2000s OECD Developing Trans Total % % WPop WGdp --------------------------------------------------------------------------- rising 13 24 23 60 76 71 constant 1 15 1 17 19 18 declining 6 3 0 9 5 11 --------------------------------------------------------------------------- Total 20 42 24 85 100 100 Increases were most frequent in L.America and the Asian transition economies, followed by S.Asia and recently by S.E. + E. Asia. There are few data for MENA

  16. (iv) Inflation (left) falls, relative price of food seems to rise only seldom

  17. (v) No generalized fall in pub. health outlay but rising OOPC+exclusion form care • In China, the % of patients • not seeking medical treatment due to financial diffic. rose between 1993 and 1998 from 3-9% to 36-42% • people not hospitalized when in need due to fin. difficulties rose from 34-53% in 93 to 53-70% in 98 • Similar survey-based evidence from several other transition and non countries

  18. (vi) technical progress in health • (i) has Glob improved discovery new drugs for poor cties? • Only 10 % health R&D is on diseases explaining 90% of glob.disease burden • 1393 new drugs patented over 1975-99: only 16 were for tropical diseases/tbc • Still no vaccine against malaria (10% of all deaths in SSA) • (ii) has Globaliz facilitated access to new health technol. ? • Trade liberalization + web facilitate transfer of knowledge • But ….TRIPS raised royalties on patented drugs • Migration of health staff South North poses problem in part of SSA • Liberalization of health systems (privatiz/user fees) created price barriers

  19. (vii) Technical progress

  20. (viii) limited data on lyfestyles, except alcohol (below). Problem also in South

  21. (ix) Exogenous Shocks Number of conflicts 1960-2002

  22. (x)LEB crucially affected by AIDS • Country 2005LEB with AIDS 2005LEBwithout AIDS Botswana * 33.9 76.1 Ethiopia 48.8 53.5 Mozambique 40.3 50.9 Namibia* 43.9 70.3 S.Africa* 43.3 67.0 Zambia* 39.7 56.6

  23. 3. Global estimates of determinants of LEB-IMR-U5MR

  24. Global elasticities for LEB At mean value of explanation variables

  25. 4. Simulating LEB impact of globalisation • Simulate with this model whether changes in health determinants during last globalisation improved/reduced LEB • Assumed counterfactual case where health determinants • Behaved over 1980-2005 as they did over 60-80 • medical progress (except immun), war, disasters & AIDS have not occurred • Calculated what LEB would have been under these H0. • Subtracted for 2000‘counterfactual LEB’ from ‘real LEB’. In symbols: • Positive difference (+) indicates gains observed during Globalisation, negative one (-) indicates loss

  26. Comments on simulation results: relative weight of RHS variables • At global level, policies reduced LEB by 1.52 yrs (with offsetting effects). • Inequality rise depressed LEB by -.77 years • So did slowdown in DPT coverage since 1990 • Small LEB losses were caused by slow rise in 1980s-90s in n. of physicians relative to GDP/c. • GDP growth raised LEB by 0.73 yr – though with huge regional variation • a drop in illiteracy and better health behaviours (alcohol consumption) and faster than-past rise in migrant stock raised LEB, if with regional variation • As for endogenous shocks • Medical technology added -0.31 an 3.04 yrs to LEB • AIDS cut worldwide LEB by 0.76 yrs. • Wars and disasters appear to have very limited effects • Overall, LEB grew almost as fast as in the counterfactual, because of fast health technology progress, despite LEB loss due to globalization policies • ‘technology transfer’-TRIPS are thus key to trends in health status

  27. Comment on simulation results: regions • biggest LEB losers due to policies in the Globalisation Era are SSA &transition countries • China suffered from ‘policy driven’ LEB loss, as large gains due to unorthodox growth were offset by losses due to rising inequality, slower gains in female illiteracy, alcohol consumption, physicians, DPT. • India is also loser as gains in GDP/c + female literacy, are over-compensated by losses due to slower than average DPT coverage, volatility, rising ineq. • East Asia gained, as it experienced small rises in inequality, and faster than past gains in medical staffing, alcohol consumption and female illiteracy but not DPT, inequality and growth – • South Asia (excluding India) exhibits marked LEB losses due to a worse-than-expected performance in all social policies, but appears to have benefited from a considerable transfer of medical technology. • OECD gains a bit from the policies introduced during globalisation • LEB improves most in MENA as result of large gains in female education and medical staffing which are offset in part by a moderate losses due to slower growth and rising inequality and volatility.

  28. 6. How much LEB loss is due to reforms? impact of reforms is complex ….. • Reforms may fail to improve income/c, inequality, on average or for some groups for reasons seen above. • bigger LEB losses than LEB gains in case of strong churning • Financial (and trade) reforms can affect health status via rise in instability and uncertainty • Trade and FDI liberalisation + tax reform reduce revenue and may reduce public health spending • FDI in tobacco, food production, distribution + domestic deregulation may open door to smoking /drinking/obesity even in poor countries (e.g. China)

  29. Liberalis/privatisation of health services • Globalisation of ‘private-insurance based’ provision model  exclusion from care • Rising user fees in public establishment+OOPC • Changing health benefit incidence of pub health exp? • Better services for some, exclusion for many (as in VN-China-Uzbek-Moldova) • Public funding of health care eroded in some countries • Opening to ‘managed care’ providers

  30. globalisation and public health care • ‘Race to the bottom’ due to capital mobility can erodes norms on trade-unions, min-wages, work safety, child labour & environment …. How widespread ? • Norm-erosion can lead to health/injury hazard, • Unclear evidence of public health cuts (China yes, LA no) • Negative effect of TRIPS on price of drugs. • Effect of GATS? Negative but probably exaggerated • Migration of health staff may worsen health in country of origin, improve it in that of destination • Globalisation of health financing policies (à la WC)-organisation (Deacon)

  31. In conclusion • Globalisation has huge potential for improving health of poor, via transfer of health technology • But there are (old and new) policy threats to LEB that are mostly ignored-denied • Lots of the health benefits/and lots of health costs of G are due to distortions in market functioning, governance problems • Some L+G policies were introduced prematurely but can (if introduced timely) improve health. Others (financial liberalisation, TRIPS) need to be changed

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