Globalization, Poverty &
Health Inequality
Dr. Amy Po-Ying HO
Senior Lecturer, The Hong Kong Polytechnic University
October 30, 2009
December 2006 WTO Meeting
Why there are always protectors in
WTO meeting around the world?
Why they are against globalization? Is
globalization necessarily bad?
Protect against WTO
Focus of this lecture
Is NOT
argue against
globalization
a comprehensive
discussion on the theory
of development,
concepts of
globalization, poverty
and health inequality
Is ABOUT
the facts on global
poverty and health
status under
globalization 1980+
the impact of economic
globalization on poverty
and health inequalities
situations in Hong Kong
The Three Questions
1. To what extent globalization can be
blamed for the growing global poverty
and health inequalities? What are the
key drivers and processes involved?
2. What can be done to alleviate the
situations?
3. What are the implications for Hong
Kong?
Defining Globalization
Dimensions – economic, political,
cultural
Closer interaction, integration and interdependence among nations,
international institutions, global
corporations and NGOs
Emergence of international institutions
and regulations, such as IMF & WTO
Globalization – doing more harm than good?
Foster economic growth
through free flow of
foreign capital, new
technology &
knowledge
Reduce poverty and
improve health in
developing countries
Create income and
health inequalities
within and between
countries
Increase health risks
Aggravate
environmental
degradation
Increase economic
vulnerability
Part I
The facts on poverty and health
inequalities
in
the
era
of
globalization (1980 onwards)
Getting richer, but not for all
The poor
Absolute poverty (<US$1 per
day) fell from 40% to 21%
from 1981-2001 (Chen &
Ravallion, 2004)
6.3 billion people on earth –
half lived on less than US$2
per day in 2003, an increase
of 50% over the past 20
years (The World Bank 2004)
The poorest 50% of the
world’s population
accounting for just 5% of
the global income (Bornstein,
2004)
The rich
20% of the population
own 80% of the world’s
wealth (United Nation,
2005)
Rich countries
accumulated wealth at
a much faster rate than
poor countries
=> Growing income
inequalities
Getting healthier, but not for all
Improved life expectancy by 20 years in the past 50 years,
but widening gaps between high-mortality developing
countries and others (World Health Report, 2003)
Life expectancy
1950 –average 46.5
2003 – 65.2 to 78 in developed countries.
- 46 for men in sub-Saharan Africa
HIV/AIDS pandemic continue to sweep across Africa and
many developing countries. It is predicted that over 100
million people will be affected globally by 2010.
1 billion suffered from malnutrition and lack of portable
water, 2.4 billion have no access to sanitation
Getting healthier, but not for all
20% deaths were children under the age of 5,
98% of which in developing countries (risk
factors – poverty, poor prenatal care,
communicable diseases); 10 million children
die of preventable diseases
Double jeopardy – burdens of communicable
and non-communicable diseases, especially
for developing countries such as China &
India
=> growing health inequalities
Part II
The impact of globalization on poverty
and health inequalities – Key drivers
and process
Globalization brought economic growth?
1980 ~ 2000 GDP per capita growth rate (%)
About 3 billion people, 24 developing countries (e.g.
China, India, Mexico) have participated actively in
globalization reaching a GDP growth of 5% in 1990s,
even better than rich countries
About 2 billion people, mainly in Africa and Latin
America and Former Soviet Union (FSU) participated
weakly in globalization, achieved negative
aggregated growth.
 These development won’t benefit the poor
automatically
Reasons for such divergence in economic development?
External and internal factors affecting
different outcomes:
Ideologies and actions of global
organizations
National policy – poor policies and
infrastructure, corruption, civil war,
weak government
Global institutions & the influence of Neo-liberalism
Global Institutions – International Monetary
Fund (IMF), The World Bank and World Trade
Organization (WTO), heavily influenced by
the Neo-liberalism ideology
Domination of rich countries and conflicting
agenda – e.g. imposing textile quotas on
developing countries, and protection for
agricultural products in their own countries
IMF & The influence of Neo-Liberalism
Mission of IMF – maintain global macro-economic
stability through attention to matters such as
government budget deficits, monetary policies,
inflation rates, and terms of trade
The prescribed policies of IMF such as reduction in
government expenditures, cost recovery, liberalization
of markets, exchange rate devaluation (neo-liberalism
influence) did lead to poverty and health
deterioration for millions of poor people in Thailand,
Indonesia, Morocco, Papua New Guinea and more…
Joseph Stiglitz, former senior economist of the World Bank, 2002
IMF & World Bank :Structural Adjustment Program
Long-term debts of developing
countries to IFM & World Bank
increased 32 times ($2 trillion in 1996)
since 1970
Loans come with “conditions” – macroeconomic stabilization & structural
economic reform, leading to currency
devaluation, cut in government
spending & cost recovery => collapse
of schools, clinics and hospitals.
How globalization impoverished developing
countries
Free flow of capital – leading to influx of hot
money and flight of skilled labor & private
capital out of the country
Increased vulnerability to external economic
shock for developing countries in time of
crisis
Global cheap-labour economy & the search
for new markets led to massive lost of jobs
Policies and Programs of IMF and the World
Bank deepen poverty
Why some countries failed to benefit from globalization?
3 views of marginalization:
1. “Join the club” – failed to developed comparative
advantages due to poor economic policies (poor
infrastructure and inadequate education, corruption,
civil war)
2. Geographical disadvantage – poor location,
extreme climate, high transportation costs offset
low tariffs
3. Missed the boat – because of the lack of good
economic policies, the golden opportunity for
joining the market was missed
The Somalia Case
Pastoral economy - remained self-sufficient in
food until 1970s
Devastated by IMF-World Bank interventions
since 1980s. Man-made famines
influx of “food aid” lead to the collapse of
livestock economy and impoverish farming
communities
led to the collapse of in foreign exchange
earnings, devaluation of Somali shilling and
disintegration of health and educational
programs
The China case
Internal reforms + Global integration
Benefited from labor-intensive manufacturing
industries- drastic reduction of poverty
(<$3)population from 42% to 13% form 1980 to
1998, but huge income inequality between rural and
urban areas
2/3 of the total decline happened between 1980 to
2004 but not after 1990s where there was an influx
of foreign trade and investment (Bardhan, 2007).
Due to national policies – de-collectivization of
agriculture, egalitarian land reform and readjustment
of farm procurement prices
The facts are
Globalization brought economic growth in both
developing and developed countries
Globalization created winners and losers both
between and within countries, but the positive
impact of globalization on poverty alleviation is
not as substantial as expected;
The impact of globalization on the poor is
complex, involving multifaceted channels
interact dynamically over space and time, and
can only be judged on the basis of “contextspecific’ empirical studies.
Globalization and its consequences on health
Economic consequence – income inequality create
health inequality
Disease control – increased flow of good and
people around the world (no place is safe)
Paradox :help spread infectious diseases; transfer
of knowledge help control the diseases
Lifestyles - Facilitate global consumption of
tobacco and fast foods
Environmental threats - Speed up environmental
degradation such as greenhouse gas emissions
and climate change
Policies of global institutions
The transfer of health problem from rich to poor country
Source: International Herald Tribute 3 Oct 2006
A highly toxic cocktail of petrochemical waste was
dumped at the doorstep of poor people in a suburb
north of Ivory Coast in early July.
It came from a Greek-owned tanker flying a
Panamanian flag and leased by the London branch
of a Swiss trading corporation whose fiscal
headquarters are in the Netherlands.
Safe disposal in Europe would have cost $300,000.
As at 3 Oct 2006, 8 people have died, dozens have
been hospitalized and some 85,000 have sought
medical attention.
WTO and the case of HIV/AIDS
2.4 mil out of 3 mil deaths and 12 mil orphaned from
AIDS occurred in sub-Saharan Africa (2000)
Patent-protected drugs for antiretroviral agents are
too high to be affordable
The General Agreement on Tariffs and Trade (GATT)
and its associated sets of Trade-related aspects of
intellectual property rights (TRIPS) make it possible
for international pharmaceutical companies to block
access of life-saving drugs to the developing world
(Valasquez & Boulet, 1999)
The relationships between low income, social determinants &
poor health
The income inequality hypothesis - Differences in health
status can be explained by wealth among nations (i.e.
GDP) Wilkinson (1996); Kawachi, Kennedy & Wilkinson,
1999)
Social determinants of health related to low income- the
poor in many countries lack access to clean water,
sanitation, adequate shelter, basic education,
vaccinations, and prenatal and maternal care, fewer
social amenities, and worse working conditions; (Marmot,
Kogevinas & Elston, 1987)
Part III
The ways out?
The Millennium Development Goals (MDGs) 1999–2015
Consensus among UN, IMF, The World Bank, OECD, G7
& G20 countries, a total of 189 countries
Eradicate extreme poverty and hunger
Achieve universal primary education
Reduce child mortality
Improve material health
Combat HIV/AIDS, Malaria, and other diseases
Ensure environmental sustainability
Develop a global partnership for development
=> Addressing poverty and health inequity between
rich and poor countries
Pro-poor policy
Between countries
•
trade policy should ensure better access to rich country
markets by developing countries for manufacturing and
agricultural products
•
Aids flows should facilitate poverty reduction
•
Formation of international organization like ILO for labor
polices and WTO for trade policies for coordinating antipoverty policies across countries (Basu,2006)
Within countries
-strengthen domestic institutions and policies e.g. economic
policy to allow workers to have a fair share of the profits
-address economic and social determinants of health
Global Partnership to improve health
United Nations Agencies – e.g. WHO, UNAIDS,
UNICEP
Multi-laterial Development Banks – e.g. The World
Bank, African Development Bank; Asian Development
Bank
Foundations – e.g. The Bills & Melinda Gates
Foundation, The Rockefeller Foundation
International Non-government Organizations (INGOs)
- e.g. Oxfam, Doctors Without Borders
Health Global Public-Private Partnership (GPPPs)– e.g.
Global Alliance for TB Drug Development;
International AIDS Vaccine Initiative
The Doha Declaration (Nov 2001)
WTO acknowledged the right to promote
access to medicines for all through a more
flexible TRIPS
Allowing members to grant compulsory
licenses for manufacture drugs to address
national emergency (including health crisis
related to HIV/AIDS, TB and other epidemics)
without obtaining prior authorization of the
patent right holders
What NGOs can do
Demonstrated an impact on reducing poverty,
mortality, morbidity for vulnerable
communities
Perceived to be innovative, effective and able
to reach the grassroots in a way government
and multilateral donors were not
Tran-national advocacy and lobbying successful in framing global agenda, changing
policies and drawing attention to neglected
areas
Social Enterprises – some examples
World Toilet Organization (WTO) is a global
non-profit organization committed to
improving toilet and sanitation conditions
worldwide. http://www.worldtoilet.org
1KG MORE - advocates an innovative concept
of travel, that every traveler may help the
local rural community http://www.1kg.org
The Grameen Bank – Banking for the poor
makes tiny loans for self-employment to some
of the poorest people in that country
http://www.grameen-info.org
Global cooperation in international public
health (Merson et al.,2006)
UN
1.
2.
3.
4.
5.
6.
Health-related Organizations (not exhaustive)
World Health Organization (WHO)
UN Children’s Fund (UNICEF)
UN Program on HIV/AIDS (UNAIDS)
UN Environmental Program (UNEP)
International Labor Organization (ILO)
World Trade Organization (WTO)
The Civil Society – Non-government organizations,
Private Foundations
The Bill and Melinda Gates Children
Vaccine Program (1998)
Donated US$100 million to reduce or
eliminate the time lag in the introduction of
new vaccines for children that exist between
the developed and developing countries
UNICEF, WHO, World Bank, International
Vaccine Institute, Ministries of Health, NGOs
and Academics are all involved
Last for 10 years on 3 new vaccines in 18
countries
Difficulties to improve global health
The IMF and WTO are still under the
heavy influenced of Neo-liberalism
Shift in power from WHO to the World
Bank because of the lack of funding
Governance and coordination issues
Ineffective government – mis-location
of fund, inequitable access to health
care …
Difficulties to improve global health
Money is necessary but insufficient condition
for better health (William Hsiao, 2007)
Choosing the right financing methods +
institutional arrangement & payment systems
is critical to providing equitable, efficient and
effective health care for all
Threats- government’s capacities,
international funds drawn health care
expertise from developing countries
Hong Kong
Globalization, poverty and Health
inequalities
Huge gap between rich and poor
Poverty population – 1.23 million (below
50% of median income)
Gini coefficient 0.43 – highest among
27 economically advance countries
Poorest 10% - 2% of the total income
Richest 10% - 34.85% of the total
income
(Source: United Nation Development Program Annual
Report 2009)
Who are the poor?
The elderly – especially widows
CSSA recipients
The working poor (engage in low-skill ,
low paid jobs; non-CSSA recipients)
People who acute and chronic illnesses
New immigrants / Racial minorities
Poverty and Poor Health
Poor people have poor health - Physical health and
mental health of income groups ‘No income’ and
‘$10,000 and below’ are worse than other income
groups (Source: Department of Health (2005),
Population Health Survey 2003/04
‘貧病交煎’: suffering from intertwined poverty
and illness
Healthcare policy and health inequality
Debate on healthcare financing reform since 1990s
Budget cut on public healthcare services
Re-prioritize public healthcare services within
limited and decreasing resources
Example: Drug Formulary implemented in July
2005
To ensure equitable access to cost effective drugs of
proven efficacy and safety, through standardization of
drug policy and utilization in all HA hospitals and clinics.
Three types of drugs: general drug, special drugs, selffinance drugs
Anything to do with globalization?
Hong Kong is an open cosmopolitan economy,
vulnerable to global financial crisis (1997, 2003, 2008)
Market liberalization - free flow of capitals to the
mainland and elsewhere, massive lost of middle and
low income jobs
Lassie-faire economic policy, leading to monopoly and
influx of “hot money” – driving small companies out
of business and driving prices up e.g. property
market
Globalization increase demand for workers with
talents and professional skills – widening income
disparity between high and low income families
Pro-poor policy?
Social welfare : CSSA, Public housing; Lowcost public health care
Work-integration: job retraining, workintegrated social enterprises (small scale)
Policies and programs proposed by the
Poverty Commission (established in 2005) e.g.
social enterprise
Reliance on the “Third Sector” to deliver
social services to the poor
Pro-poor health care policy
Maintain a safety net for families with
high health care costs
Expand the Standardized Drug
Formulary to cover patients with cancer
and other expansive drug costs
Medical coupons for the elderly and
poor families
Thank you