What AIDS Leaves Behind: A Heavy Burden on African Women

SUBMITTED BY KATHLEEN BEEGLE ON AFRICA CAN END POVERTY BLOG of World bank

Unlike other diseases in Africa (malaria, tuberculosis, intestinal worms, etc.), which mainly affect the young and the old, HIV/AIDS takes its toll on prime-age adults during the most productive years of their lives. The death of an adult family member can have large consequences for the surviving family. Given prevailing social norms in many African societies, the burden may likely be heaviest for women.

Most studies focus on the consequences for orphaned children – their schooling and health. We know less about how older adults are impacted.  In our study, we track individuals and their households in northwest Tanzania, an area of high HIV prevalence in the 1990s, over a 13-year period.

We find that, when a family member dies, women (even old women) end up working more on the farm; men do too, but not as much.  Having an asset such as goats enables them to work less. READ MORE »

Source: http://blogs.worldbank.org/africacan/

Are China’s banks having a “good crisis”?

The crisis certainly hit China hard, but the spillover to banks has been minimal thus far.Photo courtesy of randylane under a Creative Commons license.

The story of the current financial crisis is well-known now and much has been written.  Indeed, we’re now at the point where many observers are indicating that the crisis is now at an end.  It would seem that the immediate financial sector impacts are leveling off, but in many countries the economic recovery will likely take a long time.  However, a number of emerging markets have come out of the crisis in relatively stable shape.  China is the most prominent example.  In fact, one might say that China is having a “good crisis” in certain ways as it has lifted its prominence – it is the one large country seen as leading the world out of this global crisis.  The same applies for China’s financial system given that many of its banks are now the largest in the world and (at least on the surface) posting strong performance. … READ MORE »

Source: http://blogs.worldbank.org/eastasiapacific/are-china-s-banks-having-a-good-crisis

A quick look at 60 years of China’s development

SUBMITTED BY JAMES I DAVISON on Eat asia and pacific on the rise blog of world bank

Last week’s 60th anniversary celebrations marking the founding of the People’s Republic of Chinaseemed to generate a lot of coverage and interest on news and social media websites. Business magazine Fast Company used the occasion to consider 15 different development-related statistics – comparing then to now.

Most of the figures are striking, and the graphic’s triangles illustrate how rapid and staggering the changes have been in China in just six decades. Interesting data (although the magazine doesn’t specify its sources) in the infographic include:

• The average life expectancy has increased from 35 to 73 years old.
• The rate of illiteracy was 80 percent in 1949 and is 9.1 percent now.
• The enrollment rate for primary-school children went from 20 percent to 99.3 percent.

Take a closer look at the chart here. (Hat tip to Cool Infographics.)

The Labor Market, Economic Growth and Poverty Reduction (I)

The labor market represents one of the main conduits through which economic growth can help to reduce poverty.  Economic growth arises from increases in employment and/or productivity (how employment-intensive economic growth is and what part of growth is due to labor productivity will be discussed).  And, from the flip side, an economy’s failure to translate economic growth into employment opportunities can stunt its efforts to reduce poverty. Labor is the main asset of poor people and jobs represent the main pathway out of poverty for the poor. Furthermore, labor is an important factor of production for firms.

 

The functioning of countries’ labor markets is affected by a wide array of factors, including not only labor market conditions (labor regulations, tax wedges, and so on), but also natural endowments, cultural factors, and long-run economic performance.  Furthermore, external factors such as globalization and technological change play an increasing part in determining labor market outcomes within countries.  

 

Given its importance, strengthening and improving labor market conditions should bring about tangible improvements in poverty. In the short run, this will require measures that make the labor market more flexible, while closing the gap between labor supply and demand in the long run requires slower yielding policies, including improvements in human capital and training.   

 

During the next few Fridays we will analyze “labor friendliness” of economic growth, a recurring theme of the developing economy literature. We shall see that labor friendly economic growth, while sometimes useful, is a double edged sword, representing also low labor productivity growth. We will also analyze the links between the investment climate and labor market performance. We will conclude by examining labor supply trends of particular interest to developing countries, including in terms of labor force growth rates (high in developing countries), unemployment (generally accompanied by informal sector employment and underemployment in developing country cases), wages (highly unequal in certain regions), and gender issues (also highly unequal in many countries). 

Source: World Bank Poverty and Growth Program

Health, Poverty Reduction and Economic Development (VI)

The PRSP and Funding for Health

From the late 1990s, the multilaterals, working through the Enhanced HIPC Initiative and the PRSP, have recognized the importance of social spending for health and education in the macroeconomic framework by strengthening the link between debt relief, poverty and social policies. Funds freed up because of debt relief can now be increasingly targeted for government spending on public services that directly benefit the poor.  

According to Gupta et al. (2001), countries that have reached their completion point should benefit from a reduction in debt service payments of 1.9 percentage points of GDP on average a year.  For some countries, the savings from debt relief would be even more substantial—9 percent of GDP in Guyana over the coming years, Exhibit below.

 

Total revenue, Total Spending and Spending on Health in HIPCs that have reached the Decision Point

                      Source: Gupta et al., 2001  The savings freed up by debt relief can then be allocated towards social spending.  Measures to increase the poor’s access to health care and education form part of the country’s poverty reduction strategy (PRS) that is delineated in their PRSP. The increased focus on poverty reduction programs in the PRSP is likely to change the composition of total public spending and increase the budget allocation for health and education.

Annual percentage change in health spending and social indicators, 1985-99

             Source: Gupta et al., 2001   

The PRSPs of the 23 countries at the decision point in 2001 contain measures for increased spending on primary and preventive health care and primary education and the countries have increased significantly public health care spending in per capita terms. Yet health care spending in the HIPCs lagged behind that of other non-HIPC countries that were eligible for debt relief under the IMF’s PRGF in 1999, Exhibit above. About 9 percent of total government outlays went toward health care in the HIPCs in 1999, ranging from US$3 a person in Madagascar to US$35 a person in Bolivia and Guyana.  Ample scope remains to increase productively the proportion of public spending going to health care.  

However, targeting public health care alone, although on the surface compelling, may not be the most expedient way of spending funds made available under debt relief to improve social outcomes.  Targeting other high priority areas such as water and sanitation and nutrition will also improve the health of the poor.  Furthermore, available evidence suggests that increased outlays on health care do not always translate into better health care indicators.  Moreover, a focus on health care indicators alone as a measure of government policy can be misleading.  Health care indicators need to be treated with caution. Limited data and changes in the methodologies used over time also affect changes in these indicators as well as factors other than government expenditures—household income, general economic conditions, improvements in health technology and the activities of nongovernmental organizations and other private sector providers (Gupta, 1998). 

In addition, benefit incidence studies suggest that the poor gain very little from increased health outlays.  A more comprehensive strategy for improving health care spending would focus on removing the inefficiencies that exist with regard to spending, and reallocating funds to programs such as prenatal care and vaccinations against preventable diseases that are more beneficial to the poor (Gupta et al., 2001).  This has been the approach adopted in the PRSPs of the 23 countries at decision point—a commitment to increased public outlays on health care covering a wide range of poverty reduction programs.  Funds for the health sector alone are expected to increase by 0.4 percentage points of GDP between 1999 and 2001, less than the total amount of HIPC debt relief.

Source: World Bank Poverty and Growth Program

Fridays Academy: Health, Poverty Reduction and Economic Growth (V)

Development Assistance for Health – DAH

The Commission on Macroeconomics and Health (2001) concluded that the level of health spending in low income countries was insufficient to address their health challenges and that a scaling up of financing was needed in tandem with government-wide reform programs targeted towards the functioning and delivery of health services.  Reform should aim to put in place stronger planning processes both within ministries of health and between them and the ministries of finance and planning.  A concerted effort at the national level can in turn be supported by stronger collaboration among development partners providing assistance to various sectors and/or programs.  The international community has an important role to play in supporting health in the development process. 

Trends in DAH

Approximately 90 percent of total development assistance for health (DAH) comes from bilateral and multilateral agencies; the European Community (EC); the Global Fund to Fight AIDS, malaria and tuberculosis (GFATM); and grants provided by the Bill and Melinda Gates Foundation (BMGF) (Michaud, 2003).   

Total DAH from the major sources identified above increased from US$6.4 billion on average between 1997–99 to US$8.1 billion in 2002, an increase of almost a quarter.  The majority of the funds from both the public and private sources went to the GFATM. 

Recent trends in development assistance for health (DAH) selected major sources of funds US$ thousands

 

Notes: (1) was not included in totals (pending update) to increase comparability of total DAH

Source: Michaud (2003)   

 

Reflecting its recognized importance, health ODA has recently performed better than total ODA.  Bilateral commitments for health ODA increased from US$2.6 billion on average in 1997–99 to US$2.9 billion in 2002.  The largest increase in commitments came from the U.S. who pledged US$1.5 billion in 2003, from US$920 million three years previous (1997-1999).  A further US$300 million from the bilateral donors was for multilateral agencies and the GFATM. 

 

The UN agencies increased funding from US$1.6 billion to US$2 billion over the study period, the increase being largely due to the extra-budgetary contributions of the WHO.  Contributions from the World Bank, after having increased over the 1990s, now stand at US$1 billion. Commitments from the BMGF amounted to US$0.6 billion in 2002.

 

Of the US$6.5 billion provided by the above donors, the largest share went to support country and regional activities (US$5.2 billion), with the remainder going to inter-regional and global activities (Michaud, 2003).  More than one third of the funds went to Africa and US$1.25 billion was allocated to HIV/AIDS, malaria and tuberculosis.  The U.S. was the largest donor for HIV/AIDS, committing US$790 million – more than double that of the next largest donor in 2002.  GFATM allocated over half (56%) of total commitments to HIV/AIDS with 27 percent going for malaria and 15 percent to tuberculosis (Michaud, 2003).  Thus, the largest increase in DAH was allocated towards fighting AIDS in Sub-Saharan Africa, (Exhibit below).   

 Top ten countries receiving most DAH from selected major sources (2002)

  Countries with a total population of less than 1 million were not includedSource: Michaud 2003

The conclusions from the study on development assistance for health undertaken by Michaud (2003) may be summarized as: 

• DAH maintained a steady level during the 1990s even when total ODA was falling;
• Allocation of DAH has been responsive to geographical needs, at least for HIV/AIDS, malaria and tuberculosis;
• The setting up of GFATM (as suggested initially by the CMH (2001)) has generated increased commitment from the developed world in fighting major health problems in developing countries;
• The allocation of funds increased by US$1.7 billion from 1997 to 2002 but continue to fall short of meeting real needs;
• Political commitment is at an unprecedented high, with, for example, the President of the U.S. having committed US$15 billion for 14 countries to fight AIDS over the next five years. (Michaud, 2002)

Source: World Bank Poverty and Growth Programyouth

IFC-FT Essay Competition

The International Finance Corporation of the World Bank Group (IFC) and the Financial Times (FT) have announced their second annual Essay Competition. This year’s theme is “Private Sector Development: Creating Markets, Transforming Lives.”

Awards of  20,000, 10,000 and 5,000 USD up for grabs, and a chance to have your ideas published and maybe put to work.

Deadline to apply is September 30.

Submission procedures

(Via PSD Blog)
Source: World Bank Poverty and Growth Program

Fridays Academy: Health, Poverty Reduction and Economic Growth (IV)

Life Expectancy

Source:   World Development Indicators

Despite the very real challenge from AIDS, which has undone earlier progress made in health in some regions (exhibit above) the challenges to improve health indicators further are not insurmountable. CMH note that the “epidemiological evidence conveys a crucial message: the vast majority of the excess disease burden is the result of a relatively small number of identifiable conditions, each with a set of existing health interventions that can dramatically improve health and reduce the deaths associated with these conditions”. 

While corruption, mismanagement and a weak public sector do hinder improvements in health, the basic factor is that the poor simply lack the financial resources to obtain coverage of essential interventions.  CMH (2001) estimated that the cost of these health interventions would amount to between US$30 and US$40 per person per year to cover essential interventions including those needed for AIDS.   Average health spending in least developed countries is approximately US$13 per person per year in total health expenditures of which budgetary outlays are US$7 (average health spending in high income countries is at least US$2000 per person per year).  More efficient and greater resource mobilization among poor countries will not bridge the gap in financing and donor finance is needed. CMH (2001) suggests a scaling up of health investments would require US$27 billion per year in donor grants by 2007. Currently US$6 billion is being provided. 
As noted in previous postings, the macroeconomic impact of rapidly scaling up aid flows may generate inflation, macroeconomic instability, increase the debt burden where the aid comes in the form of loans rather than grants, and short-term volatility in the exchange rate and interest rate.  In particular, where aid is used to purchase local goods and services, their costs may rise faster than their supply. This issue would affect the health sector where “local costs are typically 70-75 percent of total spending and where the number of skilled staff cannot be increased quickly” (WHO).  However, not increasing aid is not an option. Moreover, in an environment in which aid flows are predictable and persistent, where timing of disbursements matches national budget cycles and where the country has already initiated improvements in health and macroeconomic stability should make for fewer problems with a scaling up of aid. In addition, increased aid inflows may target other sectors—road construction and sanitation—that indirectly affect health and that have less potential for inflationary and macroeconomic instability. 

Source: World Bank Poverty and Growth Program

Migration and Development Conference, May 23-24, Washington DC

Organized by the World Bank’s Migration Group, the OECD Development Centre and the Migration Policy Institute.

This two-day conference will provide the space for a dialogue between the external research and policy community to identify critical areas for interventions that enhance the development impact of migration. It will make an explicit effort in identifying policy areas for increased attention and action from international policy institutions.

More information.

Registration form.

For a less academic analysis of migration, see the recent story in the New York Times Magazine (for members), which looks at this issue from a more personal point of view.
Source: World Bank Poverty and Growth Program

Fridays Academy: Health, Poverty Reduction and Economic Growth (III)

Evidence from cross-country growth regressions suggests that improvements in health make a large contribution to economic growth, and the initial health of a population has been identified as one of the most robust factors contributing to economic growth as economies adjust over time to their steady-state output level when growth then begins to slow.  Bloom, Canning and Sevilla (2004) found that one extra year of life expectancy raised steady-state GDP per capita by about 4 percent (Bloom, Canning and Jamison, 2004). Each 10 percent improvement in life expectancy at birth is associated with a rise in economic growth of between 0.3 and 0.4 percentage points per year, all other growth factors held constant. This means that the difference in annual growth between a rich country, where life expectancy at birth is around 77 years on average, and a typical poor country, 49 years on average, is about 1.6 percentage points a year that, over time, adds to a substantial effect.  Thus, health status explains part of the difference in growth rates among rich and poor countries, even after controlling for other macroeconomic variables.  Furthermore, Bloom and Sachs (1998) showed that more than half of the growth disparity between Africa and East Asia was statistically explained by disease burden, demography and geography.

A virtuous cycle characterizes the health-growth relationship. Improvements in health increase economic growth that in turn facilitate further health improvements.  This pattern of cumulative causation increases for a time before diminishing returns to health set in as demographics take over and the population ages.   This non-linear relationship was also identified by Preston in 1975.
Preston (1975), in examining the cross-country relationship between average income and increases in life expectancy, found that increases in average income among poor countries are strongly associated with increases in life expectancy. As income per head rises, the relationship flattens out. Thus for rich countries, the relationship is weak or absent.  If this nonlinear relationship also holds within countries, then we would expect that the more equal a country is in terms of income per head, the higher average life-expectancy and transfers from rich to poor should increase overall average life expectancy. Deaton (2001) finds that the effect of income on reducing the probability of death at the bottom of the income distribution is much greater than its effect at the top of the distribution. Thus, a redistribution of income, even without an increase in average income should bring about an improvement in average health.  Similarly, among poor countries, a redistribution of income to poorer countries within the group should improve infant and child mortality near the bottom of the distribution.  However, as noted by Deaton (2001), average  income matters more than income inequality  for population health in poor countries.

However, focusing solely on GDP per capita as a measure of a country’s economic performance misses the fact that health indicators vary widely for the same income level.  A more accurate measure is the concept of “full income” “that captures the value of changes in life expectancy by including them in a measure of economic welfare” (Bloom, Canning and Jamison, 2005, p.12).  A proxy for full income is the ‘value of a statistical life’, i.e. the willingness to pay to avoid risks and is defined as the observed amount required accepting a risk divided by the level of the risk.  Bloom, Canning and Jamison give the example of a worker who demands and gets US$500 extra a year to accept a more risky but similar job where the increase in the mortality rate is 1 in 10,000. Thus, the VSL is (US$500/1/10,000) = US$5,000,000.  Based on research by Viscusi and Aldy (2003), a country’s range of values for VSL lies between 100 to 200 times its GDP per capita. VSLs for richer countries are more likely to lie nearer to 200 given that the willingness to pay to avoid risks increases with income.

Bloom, Canning and Jamison (2005) estimate full income for Africa in an attempt to measure the impact of AIDS on full income.  Even though life expectancy in sub-Saharan Africa has declined to 46 years and almost 21 percent of deaths were directly attributable to AIDS (numbers are for 2001), little impact was found on GDP per capita.  This does not preclude GDP per capita decreasing in the long-run as education and savings rates may fall because of high mortality rates. Two studies undertaken respectively for the WHO and the IMF both concluded “that the AIDS epidemic in the 1990s had far more adverse economic consequences than its effects on per capita GDP would suggest” (Bloom, Canning and Jameison, 2004, p. 13).  Using the change in GDP per capita and the value of changes in mortality rates  i.e. by calculating the impact of AIDS on mortality rates  as a measure of full income, the authors suggest that income declined by 1.7 percent a year from 1990 to 2000, ‘far higher than existing estimates of the effect of AIDS on GDP’ (Bloom, Canning and Jamison, 2004, p. 13).  Furthermore, improvements in adult health prior to 1990 suggested larger economic benefits relative to changes in GDP per capita. The exhibit below shows that when comparing full income with GDP per head, Kenya’s economic performance before 1990 was significantly underestimated and overestimated since then.
Comparison of Full-Income and GDP per head for Kenya, 1960-2000

                Source: Bloom, Canning and Jamison, 2004  
Source: World Bank Poverty and Growth Program