Trade, foreign policy, diplomacy and health

1. Global Public Goods and Health: concepts and issues

David Woodward, Richard D Smith


Wider economic externality effects

While economic effects of ill-health on households may appear essentially private, the cumulative effect on the national/regional economy of the resulting loss of production and income, and thus the potential gains from health improvements, may be substantial
e.g. HIV/AIDS in Southern Africa

The second important externality aspect of health amenable to conceptualising as having GPG properties is that of wider economic externality effects. The economic effects of ill-health on households may be considerable. While these effects appear essentially private, the cumulative effect on the national/regional economy of the resulting loss of production and income, and thus the potential gains from health improvements, may be substantial. For example, the Commission on Macroeconomics and Health reported that each 10% improvement in life expectancy at birth is associated with an increase in economic growth of at least 0.3 percentage points per year, holding other growth factors constant. The difference in annual growth accounted for by life expectancy at birth between a typical developed and developing nation is around 1.6% (CMH 2001, p24).
The close, mutual, relationship between poverty and disease – particularly communicable disease – has been recognised for generations. Not only does disease reduce the productivity and incomes of people and nations, as indicated, but the resultant poverty also impacts on health through its effects on nutrition, education, housing and health care, creating a cycle of ill-health and poverty which is hard to break

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