What does globalisation mean for health?

By Diana Smith, June 1999

The impact of globalisation has harmed the health of the poor. The author describes how the policies affect health and provides some of the evidence.

Everyone agrees that the process of globalisation has made the gap between rich and poor greater, both within and between countries. This factor alone has had serious consequences for the health of the poor. In India, for example, while the elite and the middle class have grown over the past decade, malnutrition among the children of the poor has not improved, and may have worsened. In sub-Saharan Africa, one of the poorest regions of the world, declining economic conditions have resulted in mortality rates actually rising in some countries. This sad development follows several decades in which mortality rates had declined steadily worldwide.

The Ideology of Globalisation

The ideology associated with globalisation is that of ‘market forces’ economics. With the collapse of the socialist system in the former Soviet bloc, belief that the ‘invisible hand’ of the market mechanism must be allowed to operate unimpeded received a tremendous boost. Government action and control is now seen as the cause of inflation, debt and economic recession, while the private sector is promoted as the creator of efficiency and growth.

Global and national thinking and policy is therefore oriented towards privatisation and liberalisation, and subsidisation, regulation and protection of national enterprise are frowned upon. Unburdened by government taxes, intervention and regulations, the argument goes, a competitive private sector will stimulate trade and attract foreign investment.

In many countries, governments have willingly adopted the ideology of globalisation. In fact, elites often benefit from increased flows of trade, investment and finance associated with liberalisation policies. However, in many poorer countries, ‘market forces’ policies have been introduced as part of structural adjustment programmes.

Declining international assistance and increasing debt forced many governments to accept conditions imposed by the World Bank in return for loans from the International Monetary Fund. At the same time, all countries face new international trade rules and regulations. These are set by the World Trade Organisation in discussions dominated by the interests of the transnational corporations.

How do the policies associated with globalisation affect the health sector?

First, reduced overall government spending means government spending on health falls. Since governments are the main providers of mother and child health services, AIDS prevention work, leprosy control programmes and anti-smoking campaigns, these and other primary health care initiatives are particularly badly affected. In government services which remain after the cuts, user charges are often introduced. This method of introducing the market mechanism into the provision of health care obviously makes services less available to the poor.

The privatisation of health and hospital services also makes the poor suffer as services become more oriented towards those who can pay. In addition, essential drug policies, which aim to make necessary pharmaceuticals available to all at an affordable price, are threatened by increasingly liberal policies towards pharmaceutical companies. Finally, increasing unemployment and poverty add to the nation’s health problems by creating extra demands on reduced government services.

Policies in Practice

Considerable evidence exists that public health services have been reduced as a result of the policies associated with globalisation. For example, in China today, 15,000 villages are without clinics or regular health workers. Experts believe that in some cases this lack of provision is directly related to health system reforms.

Dr Li Enlin, director of Amity Medical Directorate in Beijing, says health workers have left their villages and clinics have been abandoned since the opening up of the private health market. Similarly, an in-depth study in Zimbabwe on the impact of the country’s structural adjustment programme has revealed cuts in public health services and a decline in the use of existing services due to increased user charges.

User charges are introduced in an effort both to reduce government spending and to enhance the working of the market mechanism in health. In theory, the charges increase efficiency and allow health costs to be shared with those who can afford to pay. A system usually exists which allows the poor to apply for the right to free services. In practice, however, applying for clearance to local committees is a tedious process. Poor families ultimately decide either to do without the services or to pay the charges that they can ill afford.

Even where government policy does not stipulate that patients should be charged fees, tight government health budgets result in the introduction of informal charging. As government funds and supplies to hospitals become more sporadic, health workers may have little option but to begin charging patients for drugs and services. Evidence of the introduction of informal charging exists in several countries of Africa and Eastern Europe.

Privatisation and the development of the private health sector may also result in relatively fewer health promotion services. Preventive and promotional services are traditionally the domain of the government sector. In Zimbabwe, the structural adjustment programme led to a fall in child immunisation.

Perhaps even more worrying is that privatised services mean more health providers are directed by the profit motive. A recent meeting of Health Action International was told that private health workers in Uganda were feeling obliged to provide injections to demanding patients for fear of losing customers. Prescriptions for the most effective, safe and economical drugs were rare.

More than 120 countries worldwide rely on essential drugs lists, but implementation of related policy requires government involvement and strict control and regulation of the pharmaceutical companies. Reduced government intervention associated with the opening up of markets to foreign investment makes enforcement of essential drugs policies more difficult.

It may also threaten local manufacture of generic drugs. In Lesotho, health experts feared that liberalisation policies would result in a foreign take-over of the country’s drug manufacturing enterprise, and a reorientation of production away from generics and towards drugs offering higher profit margins.

Finally, the job insecurity and unemployment created by globalisation presents its own health problems. According to UNCTAD’s 1997 Trade and Development Report, almost all countries that have undertaken rapid trade liberalisation have seen unemployment grow and wages drop for unskilled workers.

For many people, unemployment means living in poverty, and no work means no access to health services. Low-paid health workers often lose their jobs as governments cut health spending. Globalisation may bring in new industry but benefits to employees are often restricted by ‘no strike’ clauses and lack of government regulation on working conditions.

Everywhere, unemployment and poverty are associated with declining living conditions and a rising incidence of mental illness, alcoholism, tuberculosis and sexually transmitted diseases. These additional health burdens weigh heavily on reduced government services.

Hope for the Future

Nevertheless, globalisation has brought with it important communication technology which is helping to share a wide range of health information rapidly. Of particular importance in the struggle for health for all is the use of this technology by groups monitoring unethical marketing practices in pharmaceuticals, pesticides and powdered baby-milk. By providing evidence to governments and international trade negotiations, some abuse of power by transnational corporations may be averted.

At the same time, there are signs of a change in thinking at the international level. The World Health Organisation has launched a revival of its ‘Health for All’ strategy, and is involving non-governmental organisations in discussions. This development may help to strengthen the relative position of WHO against the power of the World Bank, IMF and WTO.

At the same time, the World Bank is taking a new line on the role of governments. Its latest World Development Report makes much of the need for an ‘effective state’ with policies and programmes which ‘ensure the benefits of market-led growth are shared, particularly through investments in basic education and health’. Maybe, at last, thinking is changing and more emphasis will be given to health and the quality of people’s lives.

—Third World Network Features