Globalization and Health

Overview

• What is globalization?
• Relationship between globalization and health
• Aspects of globalization that may effect health
• Health, international trade and WTO
• Trade in health services and GATS
What is ‘Globalization’?

• Easier travel & communication

• Mixing of customs & cultures
• Integration of national economies (removal of
barriers to international trade & finance) –
‘liberalization’ or ‘openness’

• Means cannot view national health, interventions

and policies in isolation from:
• other countries
• other sectors (e.g. travel, finance)
 Globalization
economic opening cross-border flows
goods, services,
capital, people,
ideas, information

international
rules and
institutions

national economy and

health-related sectors

risk household health

factors economy services

HEALTH
Aspects of Globalization that
may effect Health
• General effect on health from changes in national
economic growth – link between ‘health and wealth’
• Environmental degradation (e.g. air, water pollution)
• Improved access to knowledge and technology
• Marketing of harmful products & unhealthy
behaviours
• Conflict & security
• Cross-border transmission of disease
 Emerging/re-emerging infectious
diseases 1996 to 2003
Legionnaire’s Disease

Multidrug resistant
Cryptosporidiosis Salmonella
E.coli O157
E.coli non-O157
SARS BSE Typhoid
Malaria E.coli O157
nvCJD
Lyme Borreliosis West Nile Virus Diphtheria
West Nile SARS
Reston virus Fever Influenza (H5N1)
Lassa fever Echinococcosis
W135 Nipah Virus
Yellow fever
Cholera 0139 Reston Virus
Venezuelan Buruli ulcer RVF/VHF
O’nyong- Dengue
Equine Encephalitis Ebola haemhorrhagic
nyong fever
haemorrhagic fever
Dengue fever Human
haemhorrhagic Monkeypox
Cholera Cholera Equine Ross River
fever
morbillivirus virus

Hendra virus
Economic impact, selected infectious disease
outbreaks, 1990–1999

USA—E. coli 0157 UK—BSE

Food recall/ US$ > 9 billion
destruction HONG KONG SAR
1990-1998
Periodic Influenza A (H5N1)
Poultry destruction, 1997
INDIA—Plague
US$ 1.7 billion,
1995
UR TANZANIA MALAYSIA—Nipah
PERU—Cholera
Cholera Pig destruction, 1999
Seafood
US$ 36 million
Export Barriers
1998
1991

World Health Organization

Health and International Trade
• Context: Effects of trade liberalisation on
public health

• Trade removal of impediments to

liberalisation: trade in goods and services
(especially via WTO)

• Public health: organised measures (public &/or

private) to prevent disease,
promote health or prolong life of the
population as a whole
Trade in Health Services/GATS:
Background
• International trade growing, & trade in services is
increasing percentage of this overall growth
• Of this trade, health sector is already affected by
liberalization in other areas (e.g. finance)
• Many countries see health as a sector where they
may have a comparative trade advantage
• More countries seeking to ascend to WTO and
therefore make commitments under GATS
 General Agreement on Trade
in Services (GATS)
• GATS emerged from 1994 Uruguay Round of
negotiations that created the WTO (Members agree to
progressive liberalization)
→Subject services trade to ‘same’ treatment as goods (GATT)
→Basis = liberalization increases global efficiency (comparative
advantage – lower cost, higher quality, innovation)
→Provides multilateral legal framework for liberalizing
international services trade (based on existing int. trade law)

• Debate is polarized - “Tale of Two Treaties”

→GATS is worst of treaties – undermines national sovereignty
→GATS is best of treaties – increase health
Key Aspects of GATS
• Creates ‘binary’ system – either solely public
provided (hence not covered by GATS) or not
• Commitments potentially irreversible – changes
possible (> 3 years) but entail ‘compensation’
(offering new commitments in other sectors with a
view to restoring the balance of commitments
which existed prior to the modification)
• GATS excludes “services supplied in the exercise of
governmental authority” – debate on coverage
• MFN (most favoured nation) principle
• Structure – four ‘modes of supply’
 S
T
Threshold Question:
A Does GATS Apply?
R
T
Is the health-related service
Is the health-related service No supplied by a private actor
supplied by the government? pursuant to delegated
governmental authority?
Yes
Is the health-related service Yes
supplied on a commercial basis? No
Yes
No
Is the health-related service Yes GATS applies to measures
supplied in competition with of WTO members that affect
one or more service providers? trade in health-related services
No
GATS does not apply
 Structure of GATS:
Four ‘Modes of Supply’

1. Cross border delivery (e-health)

2. Consumption abroad (movt. of patients)
3. Commercial presence (FDI hospitals)
4. Movement of personnel (doctors abroad)
Mode 1:
Cross border delivery of services

• Shipment of laboratory samples, diagnosis and

clinical consultations by mail
• E-health
• Telediagnostic
• Telesurveillance
• Teleconsultation
• Teletreatment
• Teleproducts (especially phamaceuticals)
Mode 1 Opportunities
• Enable health care delivery to remote and
underserviced areas – promoting equity
• Alleviate (some) human resource constraints
• Enable more cost-effective disease surveillance
• Improve quality of diagnosis and treatment
• Upgrade skills, disseminate knowledge through
interactive electronic means
Mode 1 Risks

• Relies on telecommunications and power sector

infrastructure
• Capital intensive, possible diversion of resources
from basic preventive and curative services
• Equity issue if it caters to a small segment of the
population - urban affluent
 Mode 2:
Consumption abroad

• Movement of patients from home country to the

country providing the diagnosis/treatment

• Movement of health professionals from home to

another country to receive medical education and
training
Mode 2 Opportunities
For exporting countries
• Generate foreign exchange earnings to increase resources
for health
• Upgrade health infrastructure, knowledge, standards and
quality

For importing countries

• Overcome shortages of physical and human resources in
speciality areas
• Receive more affordable treatment
 Mode 2 Risks

• Create dual market structure

• May crowd out local population – unless these
services are made available to local population
• Diversion of resources from the public health system
• Outflow of foreign exchange for importing countries
Mode 3:
Commercial presence

• Establishment of hospitals, clinics, diagnostic and

treatment centres and nursing homes and training
facilities through foreign direct investment – cross
border mergers/acquisitions, joint venture/alliance
• Opportunities for foreign commercial presence also
in management of health facilities and allied
services, medical and paramedical education, IT and
health care
Mode 3 Opportunities

• Generate additional resources for investment in

upgrading of infrastructure and technologies
• Reduce the burden on public resources
• Create employment opportunities
• Raise standards, improve management, quality ,
improve availability, improve education (foreign
commercial presence in medical education sector)
Mode 3 Risks

• Large initial public investments to attract FDI

• If public funds/subsidies used - potential diversion
of resources from the public health sector
• Two tier structure of health care establishments
• Internal brain drain from public to private sector
• Crowding out of poorer patients, cream skimming
phenomena
 Mode 4:
Movement of Health Professionals
• Includes doctors, nurses, paramedics, midwives, consultants,
trainers, management personnel
• Factors driving cross border movements
→ wage difference between countries
→ search for better working conditions/standards of living
→ search for greater exposure/training/qualifications
→ demand and supply imbalances between countries
• Approach towards mode 4 trade in health services by exporting
and receiving countries varies - some countries encourage
outflow, others create impediments
 Mode 4 Opportunities
From sending country
• Promote exchange of knowledge among professionals
• Upgrade skills and standards (provided service
providers return to the home country)
• Gains from remittances and transfers

From host country

• Meet shortage of health care providers, improve
access, quality and contain cost pressures
Mode 4 Risks
From sending country
• Permanent outflows of skilled personnel -
‘brain drain’
• Loss of subsidised training and financial capital
invested
• Adverse effects on equity, availability and quality
of services
Status of GATS Commitments
(No. WTO Members by Sector)

100

50

ism ancial siness ations ort ction on ent lth on ion

Tour
Bu ns p
ru re ati nm Hea tributi ducat
Fin uni
c Tra Const Rec Envir
o
Dis E
m
Com
=====Thank you======