The Financial Crisis and Global Health
Lindsay Morgan
It’s hard to see your way through a storm when you’re in the middle of one. Such is the predicament of the global health community, as we sort out what the financial crisis will mean for the health of poor people in developing countries months – even years from now. While nothing is known for certain, most agree the impact will be substantial and negative. “After wars, plagues and natural disasters, financial crises kill the poor the most,” said Liliana Rojas-Suarez, senior fellow at Center for Global Development (CGD) and an expert in financial markets. There are some measures that can be taken to mitigate the damage (such as expanding and developing safety nets), but the main task is to get more health for every dollar.
Let’s start with aid. Will politicians choose to offset a tiny fraction of the $700 billion bailout by reducing official development assistance (ODA) in general, and funding for health (which has grown disproportionately in recent years)? The evidence suggests the answer is yes. Research from CGD fellow David Roodman shows that after each previous financial crisis in a donor country since 1970 (which includes Japan, Finland, Norway and Sweden), the country's aid declined. Foreign assistance tends to be pro-cyclical – that is, shortfalls in aid and domestic revenue tend to coincide. And as InterAmerican Development Bank health expert Amanda Glassman said, “Aid for health is no exception.” But don’t expect governments to announce cuts in foreign assistance; the contraction will be invisible, with disbursements quietly dragged out and a contracting seeing a slowdown.
