School & health care fees in developing nations

Last night, Stephen Lewis (former Special Envoy to the U.N.) lectured on "Winning the Battle Against Poverty & Disease in the Developing World".

He covered the eight millennium development goals, lamented the effects that the world financial crisis is having on the developing world, and spoke passionately about the need for policy reform and direct aid to the millions suffering and dying in Africa.

While discussing the education MDG, he briefly touched on an adverse secondary effect of a well-intended policy by the World Bank and the IMF: Tying development aid to the requirement that the recipient nation impose user fees for health care and education. He noted faulty econometric modeling as a cause, but did not go into detail.

This morning I've been doing some research on the issue... why in the world did the World Bank and the IMF think it would be a good idea to charge the poorest people on the planet fees for basic health care and education? After all, public education is free in Beverly Hills California, where median income is around $90,000 and the median house price is well over $2 million.

The policies were enacted as a means of "cost-sharing" or "cost recovery", where the rationale is that by imposing nominal fees for these services, revenue will be generated that can be used to provide higher quality services to more people.

Here is some reading:

Arguments for cost sharing

Arguments against cost sharing

There's a lot more out there. To me this seems to be a question of basic microeconomics. Do you see it? What did the IMF and World Bank assume that turned out to be false? We'll talk about the issue in class today.

How HDI Relates to GDP

There is a cool interactive graphic from UNDP for comparing HDI and GDP.

Click here to give it a shot.

What does it mean when a nation's HDI rank > GDP rank?
What does it mean when a nation's HDI rank < GDP rank?

If you had to choose, where would you rather live, in a nation with a high HDI or a high per capita GDP?

Commitment to Development Index

Here's another interesting index to consider: The Commitment to Development Index (CDI) which measures seven areas where the developed world can contribute to the development of nations that are less well off.

The seven areas included in the index are:

• Quality and quantity of foreign aid
• Openness to developing-country exports
• Policies that influence investment
• Migration policies
• Environmental policies
• Security policies
• Support for creation and dissemination of new technologies

Read more...

Short article from The Economist here.

Description of the index from the Center for Global Development here (plus a whole lot of other good info).

Stephen Lewis lecture, Jan 28, UNCW

On Wed, Jan 28, 2009 7 pm in UNCW's Kenan Auditorium, Stephen Lewis will give a lecture titled “Time to Deliver: Winning the Battle Against Poverty & Disease in the Developing World”.

From UNCW:

Formerly the Special Envoy to UN Secretary-General Kofi Annan, Stephen Lewis founded the Stephen Lewis Foundation in Canada, which aims to ease the pain of HIV/AIDS in Africa by funding grassroots projects. In Lewis’ best-selling book, Race Against Time, he tackles the AIDS crisis head on, probing the appalling gap between vision and current reality, while also offering bracingly attainable solutions.

The lecture is part of UNCW's Leadership Lecture Series and is Co-sponsored by UNCW Student Media, Honors Scholars Program and Coastal Carolina UN Association.

Click here for more information from UNCW, including a link to the Stephen Lewis Foundation.

I am trying to get us a block of seats. As an incentive to attend, if you attend and write a one-page summary of the lecture (as it relates to the economics of growth and development of course), you can earn up to 10 bonus points on your first exam.

Kristof on sweatshops

This topic is sure to come up during the semester: labor standards and international trade agreements.

Nicholas Kristof, columnist for the NY Times, had a good piece in Thursday's Times (it ran in today's Star News).

Click here for the editorial and click here for his follow-up.

Where's the economics?
Will labor standards help or hurt development efforts?
Hint: consider the marginal rate of technical substitution.

Short readings on PPP exchange rates

We'll be talking about purchasing power parity today in class, here are some links to extra reading:

There's a nice article here from the IMF about PPP.

And some easy-to-follow frequently asked questions about PPP from OECD here.

Finally, the most recent hamburger index from The Economist here.

NY Times on GDP and well being

An interesting article in the New York Times (August 30, 2008) covers some of the issues we discussed today in terms of GDP as a measure of well-being.

An important point that we did not cover in class is that GDP or its average (GDP per capita) does not reveal anything about the distribution of income. So, for example, two countries could have GDP per capita of $50,000 as follows:

Country A, population 300,000:
100,000 people with income = $30,000
100,000 people with income = $50,000
100,000 people with income = $70,000

Country B, population 300,000:
299,999 people with income = $1,000
1 person with income = $14,701,000,000

Both have the same per capita GDP, so look the same on paper.
But, where would you rather live?

What else does GDP not account for?

UNDP Human Development Reports

Each year the United Nations Development Program releases the Human Development Report.

The first report, released in 1990, highlighted important differences between economic growth and economic development, emphasizing (for a lot of reasons that we'll discuss in class) that national income measures (such as GDP) simply do not suffice as a measure of human well-being within a given nation.

UNDP essentially defines "development" as the improvement in people's options. Options for education, options for employment, options for health care, leisure, culture, political representation and so on... The basic idea is that more options in these facets of life translates to the ability to achieve an improved standard of living, but having more (less) money in a nation doesn't necessarily mean that people have more (less) options.

That first 1990 report provided a look back at historical development around the world since 1960, critically analyzed the state of human development around the world and suggested strategies for improvement in the future. Each year since then, the HDR provides an update since the last report, analysis and lessons learned, a lot of great statistics and a central theme.

Last year's theme (actually '07 & '08) was global climate change. In 2006 it was access to water. The theme for 2009 is migration.

These reports are extremely well-written and easy to follow and should prove to be valuable resources for our studies throughout the semester. Click here to access all Human Development Reports. Detailed reports by region and nation are also available.

Welcome to the growth and development blog!

Hello class.

This blog will be used to facilitate discussions of class topics, point out links to relevant articles, data or other useful information and, hopefully, get you thinking and writing about the issues.

I'll post topics throughout the semester, most likely a few times per week. The comments section will always be open, so please contribute to the discussion.

If you have ideas for blog topics or have found an article or news item that might be of interest to the class, please send it to me via email.

See you soon.
-ps