Globalization, Poverty & Health Inequality

1. Globalization, Poverty & Health Inequality Dr. Amy Po-Ying HO Senior Lecturer, The Hong Kong Polytechnic University October 30, 2009

2. December 2006 WTO Meeting • Why there are always protectors in WTO meeting around the world? • Why they are against globalization? Is globalization necessarily bad?

3. Protect against WTO

5. Is NOT argue against globalization a comprehensive discussion on the theory of development, concepts of globalization, poverty and health inequality Is ABOUT the facts on global poverty and health status under globalization 1980+ the impact of economic globalization on poverty and health inequalities situations in Hong Kong Focus of this lecture

6. The Three Questions • To what extent globalization can be blamed for the growing global poverty and health inequalities? What are the key drivers and processes involved? • What can be done to alleviate the situations? • What are the implications for Hong Kong?

7. Defining Globalization • Dimensions – economic, political, cultural • Closer interaction, integration and inter-dependence among nations, international institutions, global corporations and NGOs • Emergence of international institutions and regulations, such as IMF & WTO

8. Foster economic growth through free flow of foreign capital, new technology & knowledge Reduce poverty and improve health in developing countries Create income and health inequalities within and between countries Increase health risks Aggravate environmental degradation Increase economic vulnerability Globalization – doing more harm than good?

9. Part I The facts on poverty and health inequalities in the era of globalization (1980 onwards)

10. The poor Absolute poverty (<US$1 per day) fell from 40% to 21% from 1981-2001 (Chen & Ravallion, 2004) 6.3 billion people on earth – half lived on less than US$2 per day in 2003, an increase of 50% over the past 20 years (The World Bank 2004) The poorest 50% of the world’s population accounting for just 5% of the global income (Bornstein, 2004) The rich 20% of the population own 80% of the world’s wealth (United Nation, 2005) Rich countries accumulated wealth at a much faster rate than poor countries => Growing income inequalities Getting richer, but not for all

11. Getting healthier, but not for all • Improved life expectancy by 20 years in the past 50 years, but widening gaps between high-mortality developing countries and others (World Health Report, 2003) Life expectancy 1950 –average 46.5 2003 – 65.2 to 78 in developed countries. - 46 for men in sub-Saharan Africa • HIV/AIDS pandemic continue to sweep across Africa and many developing countries. It is predicted that over 100 million people will be affected globally by 2010. • 1 billion suffered from malnutrition and lack of portable water, 2.4 billion have no access to sanitation

12. Getting healthier, but not for all • 20% deaths were children under the age of 5, 98% of which in developing countries (risk factors – poverty, poor prenatal care, communicable diseases); 10 million children die of preventable diseases • Double jeopardy – burdens of communicable and non-communicable diseases, especially for developing countries such as China & India => growing health inequalities

13. Part II The impact of globalization on poverty and health inequalities – Key drivers and process

14. Globalization brought economic growth? 1980 ~ 2000 GDP per capita growth rate (%) • About 3 billion people, 24 developing countries (e.g. China, India, Mexico) have participated actively in globalization reaching a GDP growth of 5% in 1990s, even better than rich countries • About 2 billion people, mainly in Africa and Latin America and Former Soviet Union (FSU) participated weakly in globalization, achieved negative aggregated growth. • These development won’t benefit the poor automatically

15. Reasons for such divergence in economic development? External and internal factors affecting different outcomes: • Ideologies and actions of global organizations • National policy – poor policies and infrastructure, corruption, civil war, weak government

16. Global institutions & the influence of Neo-liberalism • Global Institutions – International Monetary Fund (IMF), The World Bank and World Trade Organization (WTO), heavily influenced by the Neo-liberalism ideology • Domination of rich countries and conflicting agenda – e.g. imposing textile quotas on developing countries, and protection for agricultural products in their own countries

17. IMF & The influence of Neo-Liberalism • Mission of IMF – maintain global macro-economic stability through attention to matters such as government budget deficits, monetary policies, inflation rates, and terms of trade • The prescribed policies of IMF such as reduction in government expenditures, cost recovery, liberalization of markets, exchange rate devaluation (neo-liberalism influence) did lead to poverty and health deterioration for millions of poor people in Thailand, Indonesia, Morocco, Papua New Guinea and more… Joseph Stiglitz, former senior economist of the World Bank, 2002

18. IMF & World Bank :Structural Adjustment Program • Long-term debts of developing countries to IFM & World Bank increased 32 times ($2 trillion in 1996) since 1970 • Loans come with “conditions” – macro-economic stabilization & structural economic reform, leading to currency devaluation, cut in government spending & cost recovery => collapse of schools, clinics and hospitals.

19. How globalization impoverished developing countries • Free flow of capital – leading to influx of hot money and flight of skilled labor & private capital out of the country • Increased vulnerability to external economic shock for developing countries in time of crisis • Global cheap-labour economy & the search for new markets led to massive lost of jobs • Policies and Programs of IMF and the World Bank deepen poverty

20. Why some countries failed to benefit from globalization? 3 views of marginalization: • “Join the club” – failed to developed comparative advantages due to poor economic policies (poor infrastructure and inadequate education, corruption, civil war) • Geographical disadvantage – poor location, extreme climate, high transportation costs offset low tariffs • Missed the boat – because of the lack of good economic policies, the golden opportunity for joining the market was missed

21. The Somalia Case • Pastoral economy - remained self-sufficient in food until 1970s • Devastated by IMF-World Bank interventions since 1980s. Man-made famines • influx of “food aid” lead to the collapse of livestock economy and impoverish farming communities • led to the collapse of in foreign exchange earnings, devaluation of Somali shilling and disintegration of health and educational programs

22. The China case Internal reforms + Global integration • Benefited from labor-intensive manufacturing industries- drastic reduction of poverty (<$3)population from 42% to 13% form 1980 to 1998, but huge income inequality between rural and urban areas • 2/3 of the total decline happened between 1980 to 2004 but not after 1990s where there was an influx of foreign trade and investment (Bardhan, 2007). • Due to national policies – de-collectivization of agriculture, egalitarian land reform and readjustment of farm procurement prices

23. The facts are • Globalization brought economic growth in both developing and developed countries • Globalization created winners and losers both between and within countries, but the positive impact of globalization on poverty alleviation is not as substantial as expected; • The impact of globalization on the poor is complex, involving multifaceted channels interact dynamically over space and time, and can only be judged on the basis of “context-specific’ empirical studies.

24. Globalization and its consequences on health • Economic consequence – income inequality create health inequality • Disease control – increased flow of good and people around the world (no place is safe) Paradox :help spread infectious diseases; transfer of knowledge help control the diseases • Lifestyles - Facilitate global consumption of tobacco and fast foods • Environmental threats - Speed up environmental degradation such as greenhouse gas emissions and climate change • Policies of global institutions

25. The transfer of health problem from rich to poor country Source: International Herald Tribute 3 Oct 2006 • A highly toxic cocktail of petrochemical waste was dumped at the doorstep of poor people in a suburb north of Ivory Coast in early July. • It came from a Greek-owned tanker flying a Panamanian flag and leased by the London branch of a Swiss trading corporation whose fiscal headquarters are in the Netherlands. • Safe disposal in Europe would have cost $300,000. • As at 3 Oct 2006, 8 people have died, dozens have been hospitalized and some 85,000 have sought medical attention.

26. WTO and the case of HIV/AIDS • 2.4 mil out of 3 mil deaths and 12 mil orphaned from AIDS occurred in sub-Saharan Africa (2000) • Patent-protected drugs for antiretroviral agents are too high to be affordable • The General Agreement on Tariffs and Trade (GATT) and its associated sets of Trade-related aspects of intellectual property rights (TRIPS) make it possible for international pharmaceutical companies to block access of life-saving drugs to the developing world (Valasquez & Boulet, 1999)

27. The relationships between low income, social determinants & poor health • The income inequality hypothesis - Differences in health status can be explained by wealth among nations (i.e. GDP) Wilkinson (1996); Kawachi, Kennedy & Wilkinson, 1999) • Social determinants of health related to low income- the poor in many countries lack access to clean water, sanitation, adequate shelter, basic education, vaccinations, and prenatal and maternal care, fewer social amenities, and worse working conditions; (Marmot, Kogevinas & Elston, 1987)

28. Part III The ways out?

29. The Millennium Development Goals (MDGs) 1999–2015 Consensus among UN, IMF, The World Bank, OECD, G7 & G20 countries, a total of 189 countries • Eradicate extreme poverty and hunger • Achieve universal primary education • Reduce child mortality • Improve material health • Combat HIV/AIDS, Malaria, and other diseases • Ensure environmental sustainability • Develop a global partnership for development => Addressing poverty and health inequity between rich and poor countries

30. Pro-poor policy Between countries • trade policy should ensure better access to rich country markets by developing countries for manufacturing and agricultural products • Aids flows should facilitate poverty reduction • Formation of international organization like ILO for labor polices and WTO for trade policies for coordinating anti-poverty policies across countries (Basu,2006) Within countries -strengthen domestic institutions and policies e.g. economic policy to allow workers to have a fair share of the profits -address economic and social determinants of health

31. Global Partnership to improve health • United Nations Agencies – e.g. WHO, UNAIDS, UNICEP • Multi-laterial Development Banks – e.g. The World Bank, African Development Bank; Asian Development Bank • Foundations – e.g. The Bills & Melinda Gates Foundation, The Rockefeller Foundation • International Non-government Organizations (INGOs) - e.g. Oxfam, Doctors Without Borders • Health Global Public-Private Partnership (GPPPs)– e.g. Global Alliance for TB Drug Development; International AIDS Vaccine Initiative

32. The Doha Declaration (Nov 2001) • WTO acknowledged the right to promote access to medicines for all through a more flexible TRIPS • Allowing members to grant compulsory licenses for manufacture drugs to address national emergency (including health crisis related to HIV/AIDS, TB and other epidemics) without obtaining prior authorization of the patent right holders

33. What NGOs can do • Demonstrated an impact on reducing poverty, mortality, morbidity for vulnerable communities • Perceived to be innovative, effective and able to reach the grassroots in a way government and multilateral donors were not • Tran-national advocacy and lobbying - successful in framing global agenda, changing policies and drawing attention to neglected areas

34. Social Enterprises – some examples • World Toilet Organization (WTO) is a global non-profit organization committed to improving toilet and sanitation conditions worldwide. http://www.worldtoilet.org • 1KG MORE - advocates an innovative concept of travel, that every traveler may help the local rural community http://www.1kg.org • The Grameen Bank – Banking for the poormakes tiny loans for self-employment to some of the poorest people in that country http://www.grameen-info.org

35. Global cooperation in international public health (Merson et al.,2006) UN Health-related Organizations (not exhaustive) • World Health Organization (WHO) • UN Children’s Fund (UNICEF) • UN Program on HIV/AIDS (UNAIDS) • UN Environmental Program (UNEP) • International Labor Organization (ILO) • World Trade Organization (WTO) The Civil Society – Non-government organizations, Private Foundations

36. The Bill and Melinda Gates Children Vaccine Program (1998) • Donated US$100 million to reduce or eliminate the time lag in the introduction of new vaccines for children that exist between the developed and developing countries • UNICEF, WHO, World Bank, International Vaccine Institute, Ministries of Health, NGOs and Academics are all involved • Last for 10 years on 3 new vaccines in 18 countries

37. Difficulties to improve global health • The IMF and WTO are still under the heavy influenced of Neo-liberalism • Shift in power from WHO to the World Bank because of the lack of funding • Governance and coordination issues • Ineffective government – mis-location of fund, inequitable access to health care …

38. Difficulties to improve global health • Money is necessary but insufficient condition for better health (William Hsiao, 2007) • Choosing the right financing methods + institutional arrangement & payment systems is critical to providing equitable, efficient and effective health care for all • Threats- government’s capacities, international funds drawn health care expertise from developing countries

39. Hong Kong Globalization, poverty and Health inequalities

40. Huge gap between rich and poor • Poverty population – 1.23 million (below 50% of median income) • Gini coefficient 0.43 – highest among 27 economically advance countries • Poorest 10% - 2% of the total income Richest 10% - 34.85% of the total income (Source: United Nation Development Program Annual Report 2009)

41. Who are the poor? • The elderly – especially widows • CSSA recipients • The working poor (engage in low-skill , low paid jobs; non-CSSA recipients) • People who acute and chronic illnesses • New immigrants / Racial minorities

42. Poverty and Poor Health • Poor people have poor health - Physical health and mental health of income groups ‘No income’ and ‘$10,000 and below’ are worse than other income groups (Source: Department of Health (2005), Population Health Survey 2003/04 • ‘貧病交煎’: suffering from intertwined poverty and illness

43. Healthcare policy and health inequality • Debate on healthcare financing reform since 1990s • Budget cut on public healthcare services • Re-prioritize public healthcare services within limited and decreasing resources • Example: Drug Formulary implemented in July 2005 • To ensure equitable access to cost effective drugs of proven efficacy and safety, through standardization of drug policy and utilization in all HA hospitals and clinics. • Three types of drugs: general drug, special drugs, self-finance drugs

44. Anything to do with globalization? • Hong Kong is an open cosmopolitan economy, vulnerable to global financial crisis (1997, 2003, 2008) • Market liberalization - free flow of capitals to the mainland and elsewhere, massive lost of middle and low income jobs • Lassie-faire economic policy, leading to monopoly and influx of “hot money” – driving small companies out of business and driving prices up e.g. property market • Globalization increase demand for workers with talents and professional skills – widening income disparity between high and low income families

45. Pro-poor policy? • Social welfare : CSSA, Public housing; Low-cost public health care • Work-integration: job retraining, work-integrated social enterprises (small scale) • Policies and programs proposed by the Poverty Commission (established in 2005) e.g. social enterprise • Reliance on the “Third Sector” to deliver social services to the poor

46. Pro-poor health care policy • Maintain a safety net for families with high health care costs • Expand the Standardized Drug Formulary to cover patients with cancer and other expansive drug costs • Medical coupons for the elderly and poor families

47. Thank you