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Macroeconomics, Globalization
and Health
Microeconomics: Unit of analysis being individual, households or ‘firms’ such as
hospitals.
Macroeconomics: Looks at performance and functioning of the economy as a wholerelationship between economic growth, output, employment, and inflation.
Appreciate: When currency is rising relative to other currencies, it is appreciating in
value.
Depreciate: When currency is falling relative to other currencies, it is depreciating in
value.
Balance of payment (BOP): Measures currency flows between countries.
Constant prices: Correspond to values that has been adjusted for inflation, and so
reflect the ‘real’ or actual purchasing power.
Ex: Imagine you have some money, let's say $10. Now, $10 can buy you a certain
amount of things, like a couple of snacks or a small toy. But as time goes by, the prices
of things tend to go up, which means the same $10 might not buy you as much as it
used to.
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When we talk about "constant prices," we're trying to make things fair by taking into
account this price increase. We want to figure out how much stuff you could buy with
your $10 in today's world, even if prices have gone up. So, we adjust the prices of
things to what they were like in the past (when your money was worth more), and then
we see how much you can buy with your $10 in today's world, considering those old
prices.
Current prices: Actual mentioned price, without adjustment for inflation.
Ex: if you see that toy for $10 today, that's the current price. But keep in mind that in a
few years, the same toy might cost more because of inflation. Current prices show you
what you need to pay right away, without thinking about how prices might change over
time.
Gross domestic product (GDP): An indicator used to measure the output of an
economy. It is total value of goods and services produced within one year a country
(geography).
Gross national income (GNI): Measures the economic activities undertaken by citizen
and firms of that country, regardless of where it takes place.
GNI = GDP + income earned by citizen abroad - income earned in that country by
foreigner.
Inflation: General rise in prices over time. This means that money loses its value
through time.
Purchasing power parity (PPP): Exchange rate that equate the price of a basket of
identical traded goods and services in different countries.
Ex:
Imagine you have a friend in another country, let's call it "Friendland." In Friendland,
they use a different currency, let's call it "Friendcoins." Now, you want to compare how
much stuff you can buy with your $10 in your country and how much your friend can buy
with their Friendcoins in Friendland.
But here's the tricky part: prices are different in each country, and the value of money
(exchange rate) between your currency and Friendcoins can change too. So, comparing
just the numbers directly might not give you a fair idea of who can buy more.
This is where "purchasing power parity" (PPP) comes in. It's like finding a balance
between your money and your friend's money to see who can buy more stuff when you
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consider the different prices in both countries.
Imagine you both have a list of identical things you want to buy—snacks, toys, and so
on. You figure out how much those things cost in your country with your $10 and how
much they cost in Friendland with your friend's Friendcoins. Then you use the exchange
rate to adjust the value of Friendcoins to match your currency.
So, purchasing power parity helps you compare who can buy more of the same things
even though you're in different countries with different money. It's like making things fair
by considering both the prices and the value of money.
MAJOR ELEMENTS AND LINKAGES BETWEEN THEM
AT NATIONAL AND INTERNATIONAL MACRO LEVEL
Economic Opening:
Think of economic opening as a door that countries can open to let things like goods
(stuff you buy), services (things people do for you), capital (money and investments),
people (traveling and working), ideas (creative thoughts), and information (knowledge)
move between countries more easily.
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Cross-border Flows:
When countries open their doors to the things mentioned earlier (goods, services, etc.),
they start to flow across borders like a river moving from one place to another.
International Rules and Institutions:
Imagine that the world is like a big playground with many countries. To keep things fair
and organized, countries make rules together and create groups (institutions) that help
them follow those rules.
Natural Economy and Health-related Sectors:
The "natural economy" includes things like farming and resources from nature. "Healthrelated sectors" are areas connected to health, like medicine and healthcare services.
Risk Factor:
This is like a possible danger or problem. When it comes to the natural economy and
health-related areas, there might be risks that could cause trouble.
Household Economy:
Think of a household as your family. Their economy is how they manage money and
resources to run the household smoothly.
Health System:
The health system is like a team of doctors, hospitals, and everything that helps keep
people healthy and take care of them when they're sick.
Health:
Health is simply how well your body and mind are doing – when you're not sick and feel
good.
So, putting it all together:
When countries open up to trade and other things, they need rules to make sure
everything is fair. These rules are like the rules of a game on a big playground
(international rules and institutions). This kind of opening can affect not only things like
money and services, but also areas related to nature and health.
In the areas related to nature and health, there might be risks – possible problems that
can pop up. These risks could affect not just the natural economy but also how families
manage their money (household economy). It could also influence the health system,
which takes care of people when they're sick, and the overall health of the population.
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So, in short: opening up economies can lead to the movement of all sorts of things
between countries, and this can have effects on natural resources, health, families, and
the systems that take care of people's well-being.
1. Economic Policies and Institutions, Governance, Provision of Public Goods:
These are the rules, decisions, and systems that a country uses to manage its
economy. Economic policies are like guidelines for how money and resources are used.
Institutions and governance refer to the organizations and people in charge of making
and enforcing these rules. Provision of public goods means making sure things like
roads, schools, and hospitals are available to everyone.
2. Economic Development: High Levels of GNP per capita, Growth of GNP per
capita, Poverty Reduction:
Economic development is when a country becomes wealthier and people have better
lives. GNP per capita is a way to measure how much money each person in a country
has. When GNP per capita is high, it means people are generally richer. Growth of GNP
per capita means the country's wealth is increasing over time. Poverty reduction means
fewer people are living in very poor conditions.
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3. Health:
Health is about how well people's bodies and minds are doing. It's important for
everyone to be healthy so they can live and work well.
4. Enterprise Capital: Fixed Investments, Teamwork, Investment Opportunities,
Labor and Capital Attraction:
Enterprise capital means the things a company needs to do well. Fixed investments are
things like buildings and tools that help a company work better. Teamwork is when
people cooperate to get things done. Investment opportunities mean chances to put
money into something that will grow. Attracting labor and capital means getting skilled
workers and money to help a company grow.
5. Human Capital: Education, On-the-job Training, Physical and Cognitive
Development:
Human capital is like the skills and knowledge that people have. Education means
learning things in school. On-the-job training is learning while working. Physical and
cognitive development means getting healthier and smarter.
6. Technology: Scientific Knowledge, Innovations, Diffusion of Technology:
Technology is about using knowledge to make new things and do things better.
Scientific knowledge is understanding how things work in the world. Innovations are
new ideas or ways of doing things. Diffusion of technology means spreading these new
ideas from one place to another.
Now, let's connect these concepts:
Good economic policies and institutions, along with providing public goods, help a
country's economy grow, reduce poverty, and improve health.
When a country has strong enterprise capital, it can invest in better tools, work well
together, and attract more workers and money. This leads to economic
development, less poverty, and better health.
Human capital, which includes education and training, helps people become more
skilled. This, in turn, contributes to economic development and better health.
When people are healthy, they can learn and work better, which enhances human
capital.
Health also affects enterprise capital by making sure workers are fit and able to
work well.
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Having good health and enterprise capital can lead to economic development and
reduced poverty.
Human capital and technology are closely related. More educated and skilled
people can use new scientific knowledge to come up with innovations, helping
economic development and reducing poverty.
In simpler terms, it's like a chain reaction: if a country has good rules and systems,
invests in its businesses, educates its people, and keeps them healthy, it can become
richer, reduce poverty, and overall have a better quality of life for its citizens.
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The Preston Curve is a concept that shows a relationship between a country's income
(or economic development) and its life expectancy.
the Preston Curve suggests that as a country becomes wealthier, on average, its people
tend to live longer. This makes sense because wealthier countries can afford better
healthcare, education, clean water, and other things that contribute to longer and
healthier lives.
EFFECT OF TRADE POLICY ON SOCIAL
DETERMINANTS OF HEALTH
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MACROECONOMICS AND HEALTH
1. Law of Comparative Advantage:
This is like a teamwork rule in economics. It says that if different people or countries
focus on making the things they are best at, and then trade with each other, everyone
can have more things overall.
2. Wealth and Health:
When a country has more money (wealth), it can often take better care of its people's
health. This means better hospitals, doctors, and medicines to keep everyone healthier
and happier.
3. Economic Stability:
Imagine an economy as a roller coaster. Economic stability means making sure the ride
is as smooth as possible so people don't feel too many ups and downs. Governments
and experts work to avoid extreme changes in things like prices and jobs.
4. Macroeconomics and Risk Factors for Diseases:
This is about how big economic factors, like how much money a country makes or how
many jobs it has, can affect the chances of people getting sick or staying healthy.
5. Globalization and Communicable Diseases (SARS, COVID-19):
Globalization means the world is closely connected. Sometimes, diseases can spread
more easily because of this. For example, SARS and COVID-19 are diseases that
spread around the world quickly because of how connected we are.
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6. Macroeconomics and Non-Communicable Diseases (NCDs):
These are diseases like heart problems or diabetes that often come from things like
unhealthy diets or lack of exercise. Macroeconomics looks at how these diseases are
related to big economic factors.
7. Macroeconomics and Healthcare Spending:
This is about how much money a country puts into healthcare. If a country spends more
on healthcare, it can have better hospitals, doctors, and treatments.
8. Trade of Health-Related Goods and Services (GATT):
This is like a set of rules for trading things between countries. It also includes rules for
trading health-related stuff, like medicines. These rules help countries work together
fairly when buying and selling these things.
FOREIGN AID
Foreign aid is like a helping hand that one country gives to another country. It's when a
country gives resources, money, or support to another country to help with things like
economic development, humanitarian needs, or disaster recovery.
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