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Health Investment Benefits Economic Growth

November 2, 2015 por Frederico Guanais 1 Comment


by Trevor Gunn.

Would you believe if I told you that investing in health is profitable for governments? We know that country expenditures on health are widely considered to be an economic drag, as well as a “debit” for the broader economy and for economic growth. Despite these popular notions, an increasing amount of trends and evidence points in the reverse direction- particularly for emerging economies and for some key developed economies. Investments in healthcare directly benefit the economic growth of countries.

As the Finance Minister is primarily the ultimate arbiter of the proper economic management in every country, it makes sense to more closely examine some of the potentially positive linkages between the Health Minister’s portfolio and the strategic concerns of the Finance Ministry—as it looks over tax policy, investment incentives, trade flows, and current account management—to name a few.

Health Expenditures Provide Equal Opportunity: In the words of the International Monetary Fund’s First Deputy Managing Director, David Lipton, expenditures in health and education are the “great equalizer,” a statement that should not be political or ideological in character. Particularly for emerging economies where access to basic health services is often sparse, this allows for a more solid basis and netting for them to pursue their economic and competitive goals.

Health Expenditures Translate into Productivity: Perhaps the most well-researched, documented part of the entire debate connecting health and economics is summed up with a phrase I like to use, healthy populations make for more productive populations (and the reverse is often true).

Healthcare Investments are a Critical, National Risk Minimization Tool: In a recent study published in the Washington Post, focusing on the US economy from 1973 to present, healthcare-related jobs sustained best of any job category, providing stabilization for the economy. Equally, in the US’ most deep economic crisis, 5 years ago, healthcare was the only sector that actually added jobs during the deep recession.For emerging economies, there is practically no better recent example than the Ebola crisis, that not only sent a handful of West African economies into deep economic tailspin, it impacted the entire foreign direct investment landscape of all of Africa—thus depressing growth and trade in an economically vibrant climate.  The global economic impacts of the West Africa Ebola crisis and HIV/AIDS are exceptionally well documented. Investments in proper health systems would have greatly minimized, if not eliminated, some of these crises and thus severe economic shocks.

Critical Investment in the Health Ecosystem Benefit Competitiveness: For emerging countries to develop a competitive healthcare, the innovative ecosystem would make them stronger internally, as well as better competitors internationally. Who would have known the modern cardiac stent was invented by an Argentinian cardiologist, Julio Palmaz.  Equally so, who would venture to know that a French neurosurgeon of Algerian parentage, Dr. Alim-Louis Benabid created “deep brain stimulation,” a therapy and technology that deals with the symptoms of Parkinson’s disease?It is critical to have Mexico, Brazil, South Africa, Costa Rica and countless other countries encouraging the development of their own medical technology base.   To do so, it is central to elevate the level of healthcare that inspires the biomedical engineering profession to flourish.  As countries decide that their own innovation has tremendous worth, other industries such as multitudes of suppliers, venture capital, developers of first-class healthcare facilities, etc. pop up and naturally support it.

Healthcare Infrastructure Necessary for Foreign Direct Investment: When I was director of the US Commerce Department’s office on the Russia/CIS, we were mandated to help US investors in what is perceived to be a challenging business environment;   I was struck by the importance that objective factors played in these decisions.   Some of those factors are well documented, for example, in the World Bank’s series “Doing Business”. The reality is that key foreign direct investments decisions (and then ultimately the senior executives that staff them) are being made by senior people in any company.  To recruit and make comfortable the type of high level individuals who are charged with actually making some of these decisions, the presence or absence of key medical infrastructure- hospitals, clinics, and trained medical professionals is a much more important part of company calculus than one might think at first blush. Those particularly impacted are senior level professionals, who often themselves (or their families) have health challenges.  Companies would often not allow these professionals to travel to or re-locate to emerging countries who have poor healthcare infrastructure. The result is that countries with poor healthcare infrastructure often welcome, by default, more junior company decision-makers than those who have better such infrastructure.  A company’s decision to invest in a particular country is often delayed, and may not be made decisively, as more senior decision-makers are not involved. Without proper healthcare infrastructure, foreign direct investment, seen by Finance Ministers and key officials involved in FDI attraction to be critical for economic growth, suffers noticeably.

Healthcare Infrastructure is Core to Country Infrastructure: In the past months, we have seen major private and public investors globally re-focus on the need to develop important infrastructure.   For example, the Mexican Government has plans, alongside traditional infrastructure, to build major clinics and hospitals as a part of their economic development strategy. India’s new government also sees healthcare and infrastructure as a part of their economic revitalization plans.  The lack of focus on infrastructure inspired the creation of the Asian Infrastructure Investment Bank (AIIB) in China. Healthcare, in the view of Mayors, Governors and national officials is always considered to be a part of an emerging countries’ infrastructure.  In the view of some actors, an unnatural separation exists between “traditional infrastructure” (e.g. dams, roads, power), as distinct from healthcare infrastructure.  We believe this to be a false dichotomy—and they should be thought of as “one” and very much interlinked. Having the appropriate healthcare infrastructure in place- to ensure local populations and visitors are appropriately treated- allows cash and local professionals to stay in the country.  Whether it be physical healthcare infrastructure (e.g. hospitals) or “human infrastructure” (e.g. frontline healthcare workers, nurses, doctors), healthcare is inextricably linked with all other infrastructure as a catalyst for long-term and sustainable growth.

Medical Tourism Is a Critical Way to Foster Competitiveness. Those who travel for medical care don’t leave for a common cold—they usually go for sophisticated treatment or surgery to countries where appropriate care can be delivered more cheaply and often times in a superior manner than at home.   Developing an economically vibrant sector of the economy, as Thailand, Turkey, Singapore, Colombia, Mexico and South Africa have all done, can provide for a lightning rod for excellence.Even in the US, medical tourism has a critical role to play for academic healthcare centers, such as John Hopkins, the Mayo Clinic, the Cleveland Clinic, as well as other public universities such as UPMC/University of Pittsburgh, UCLA, University of Wisconsin and countless others.   These actors are literally at the heart of US health competitiveness.   Developing medical tourism within the healthcare sector and all the elements that surround it has dramatic and positive impacts upon the country’s international competitiveness. In other words, medical tourism is fostered by different factors. Access to sophisticated medical technology, expectancy of health gains and costs are among such factors.

Helping to foster the appropriate health economy of the 21st century is not optional for Finance Ministers, the Minister of Economy, Trade or Health. Global economic dynamics and demographics dictate that all key leaders of any Government should see health as an investment, rather than as an economic burden, thus start seeing it as a sector which needs to be fostered with the critical social benefits that citizens demand.

How do you think more investment in health could benefit your country? Tell us about your experience in the comments section below or mentioning @BIDgente in Twitter.

Trevor Gunn is VP, International Relations for Medtronic & Adjunct Professor at the School of Foreign Service, Georgetown University. He is the Founder and Chairman of the USA Healthcare Alliance.


Filed Under: Health Spending and Financing, Uncategorized Tagged With: Banco Interamericano de Desarrollo, BID, políticas públicas, Salud

Frederico Guanais

Frederico C. Guanais de Aguiar es especialista líder en salud del Banco Interamericano de Desarrollo, donde se especializa en políticas de salud y planificación. De nacionalidad brasileña, se desempeñó antes de su ingreso al BID como Jefe de Gabinete y Asesor Especial del Ministerio de Desarrollo Social y de Lucha contra el Hambre en Brasil, durante la implementación y expansión a nivel nacional de las políticas de reducción de la pobreza en el país, incluido el Programa de transferencias condicionadas Bolsa Familia. Lidero la Oficina de Cooperación Internacional en la Escuela Nacional de Administración Pública de Brasil, donde implementó un cambio estratégico de la institución enfocándola hacia modelos de cooperación Sur-Sur y triangular. Posee un doctorado en administración pública de la Universidad de Nueva York, donde realizó investigaciones sobre los impactos de la descentralización de la atención primaria de salud en Brasil. Ha publicado varios estudios y papers en salud y protección social, incluidos artículos en revistas con referato tales como British Medical Journal, American Journal of Public Health, Health Affairs, Journal of Epidemiology and Community Health, Social Science and Medicine, Health Services Research y Journal of Ambulatory Care Management.

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  1. prasanjit says

    September 5, 2019 at 9:44 am

    Thanks for health and wellness tips. I appreciate your article. I am a regular visitor of your website, Please keep writing. Wish you all the best.

    Reply

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