Posted by Vita Sinclair
Thu, 12 Apr 2012
This is an adaptation of something I wrote for my application to study at KCL next September. If you disagree, please comment. It’s open for debate; I am neither an economist nor a global health student (yet).
What might be the main effects of the on-going world economic crisis on global health?
The financial crisis began shortly after the bursting of the U.S. housing market bubble in 2007, and has led to a global recession. An unprecedented response from developed world governments – massive fiscal stimulus, bailouts and monetary expansion – has followed, simply to save their banking systems and economies from collapse. This has led to increased budget deficits and austerity in a number of large economies, particularly those within the European Union. Developed world governments with large healthcare budgets now face a battle to balance austerity with the health of their citizens. Two approaches seem to be available: ring- fence the budget or seek greater efficiency through reform.
Economic recovery in the developed world seems to be underway. However, in a globalised world the effects of a crisis of such scale, beginning in the largest economy in the world, were never likely to be localised. Despite the implications for the developing world, little report has been made on the impact of global recession on countries far removed – in so many ways – from Wall Street.
It sounds like a familiar story – perhaps one that is now too familiar to surprise or even to outrage – but the greatest impact of this crisis, on health, will likely be felt in the developing world. Evidence from an Overseas Development Institute case study of ten developing countries suggests that economic growth has fallen sharply in many: growth in Cambodia ground to a halt in 2009, down from 10% in 2007, and Kenya’s growth rate halved from 7% to 3.4% over the same period. Key industry sectors including tourism, manufacturing and commodities have also suffered. Together with a reduction in foreign direct investment and remittances back home, the damage has led to an increase in the proportion within these populations living in absolute poverty, estimated by DFID to have reached an extra 90 million by December 2010. Long known is poverty’s predictive value in health; this global recession could very well contribute to an increased burden of disease in the countries affected.
How does the developing world rebuild from this setback? Post-2008, it is difficult to argue that absolute deregulation and free markets are the best means to stable long-term wealth and wellbeing for any nation. However, these very policies have been imposed by the IMF and World Bank on countries seeking financial assistance or development loans for some decades. A more nuanced approach from these institutions, both under new leadership, should see states being permitted greater sovereignty over their public sectors, particularly healthcare. This would be a step towards countering the growing health inequalities seen within developing countries.Optimistic?
‘Tom is a third year medical student at Cardiff university and will be intercalating in Global Health at King’s in September’.