Reich Political Economy 1994

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in: L. Chen, A. Kleinman, N.C. Ware, eds.HEALTH AND SOCIAL CHANGE IN INTERNATIONAL PERSPECTIVEBoston: Harvard School of Public Health, i 9 9 4 . 15

ThePolitical EC01l01ny of HealthTransitions ill the Third WorldMichael N.Reich

The health transiiion, according to some social scientists, can best beunderstood as " social or behavioral phenomenon (Caldwell 1990;Findley 199m. They have argued that the key determinants of shiftingpatterns of mortality are found in the behaviors and values of society. Itseems unlikely, however, uiat the transformations in mortality andmorbidity now underway in poor countries can be reduced to theoriesthat [OCliS solely 011 bringing people to technology, changing individualbehaviors, or al tering social values. These societies are now undergoingcomplex socia I changes, including processes of commercialization,medicalization. and internationalization. These processes, a ll shaped bythe distribution of political and economic resources, are affectingdevelopments in health. .

The resulting transitions are not necessarily in healthy directions forall social groups. New social r isks - including environmental hazards,factory production processes, and traffic accidents - create new patternsof morbidity and mortal ity. As Julio Frenk and his colleagues haveargued, the health transition (at least in some countries) is not unidirec-tional, does not follow clearly separated stages, and produces arnaklistribution of health among population groups - resulting in whatthey call a "protracted and polarized" transition (Frenk et al. 1991) (Seealso this volume). An explanation of such health transitions in poorcountries needs to consider the distribution of political and economicresources at hoth the national and international levels. This chapter'scentral point, in short, is that an analysi s of polit ical economy is essentialto understanding health transit ions in the Third World .

"111(:'pproach of polilictl economy co vers many forms of analysis,including both Marxist and non-Marxist varieties. I In general , this


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-111 Uealtb and Social CZWllil ,


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1f(j TIc'a/,I) and Sod(ll CZ1(1/1.rJ.(> ill luternational /'('r:;pective

("Summ;uy Statement" 19Wi). These findings were summarized as in-volving hugely top-down "political will" in the case- of China andprimarily bottom-up "political and social will" in the cases of Kerala(India), Sri tanka, and Costa Rica (Warren 1985). In this view, politicalwill produces good government, which in tum produces good health.

The market forces school rejects the government intervention ap-proach as inefficient, ineffective, and outdated. Good health in poorcountries results from letting tbe market do its job; "good government"means minimal intervention, acting only when necessary. 111isview insupport of privatization has been espoused by the World Bank (1988:48-.52) and llSAID (1989:47-59), and stated in a purist form by thoseopposing any regulation of industry (Starrels 19H"i). Elements of thisapproach have been advocated by economist Nancy Birdsall (1989) inher call for "good government and good health." The market forcesapproach sees inadequate performance as widespread and inherent inthe nature of the public sector. Drawing on the broader views of publicchoice theory (Buchanan 1985), this school believes that public officialsinvariably serve their OWI1 personal interests more than the broaderpublic interests. The solution to health problems in poor countries ,therefore, must rely on private-sector initiatives, such as user fees and theprivate provision of services, and on turning things over to market forces.

Both schools, however, suffer from serious problems, Simply stated,the firstsees the market as the problem and g()vernment as the solution,while the second sees government as the problem and the market as thesolution. Both approaches oversimplify. Advocates present selectiveevidence to support their arguments. And proponents on both sides tendto ignore basic political realities that would undermine effective imple-mentation of their ideas. Critical political analysis of tile two approachescan illuminate these weaknesses and help us understand the imperfec-tions of both governments and markets. And, as suggested in theconclusion, political analysis also pointe;toward a third approach intheanalysis of the political economy of health transitions, an approach thatemphasizes nongovernmental and nonmarket organizations and recog-nizes political processes as integral to positive health tr;lI1sit~ons.Government" Intervention

The school of government intervention holds that health improve-ments can he achieved in poor countries most effectively through anadminislrMive allocation of resources, with particular attention to the

Tbe Political EC(J1Um~J' (If Ilealtb Transiuons ill tb Tbird lFol/d 41 i

more vulnerable groups in society. This distribution might be carried outthrough the direct delivery ofservices, through government-owned andoperated facilities or through other means (such as national healthinsurance) to assure adequate access to affordable health resources. TIlestrategy is based on the assumptions that governments possess theknowledge and capability to improve health conditions in society andthat market imperfections require government intervention. In manycountries, the constitution specifies health as a basic right and mandatesgovernment action to provide and protect this right. The simplest versionof this argument states that government intervention improves health inpoor countries when there exists "political will." In short, if nationalleaders only exerrisccl their political will, then health transitions wouldoccur in a positive direction. This formulation, however, has multipleprobl ('ms.

11JeConcept of Political WillAt a broad level of generality, the callfor political will strikes a chord of common sense. What self-respectingpublic health professional would disagree with the need for politicalleaders to he committed to good health? - especially if commitmentmeans increased budgetary allocations to the health sector. But whatdoes political will reallymeanas anecessary condition to get good healthat low cost? And which political conditions produce the "will" that leadsto good (or at least better) health in poor countries? Is political will thesame regardless of regime type? What role does ideology play in theadoption of political commitment to equity and good health? Are someforms of the state more likely to produce goocl health than others? Theinvocation of "political will" rarely provides answers to such question".But the conceptual ambiguity of political will has not stopped its use.' 1 1 1 < . . ' phrase appears frequently as an "op-ed" concept, often in articlesopposite the editorial page in newspapers and with little systematicexplanation. One example was the callfor new public policies that couldsolve the problems of homelessness: "We know what needs to be done:what is lacking is the political will to do it- (Swanstrom I9H9).111C "failureor political will" has also been noted, in passing. as a reason forgovernment's not implementing. public policies on the export ofhazardous substan ces (lasanoff 1985: 143). Others have called for rna kingpolitiC:'l I will "more lh: '111 a slog;m.- as did the authors of a study ofarnipovcrty policies in the Third \~'orld (Lewis et al, 1988:25). deardefinitions of political will, however, are difficult to find. More (.:UII1-


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1'8 Healtb owl Social Challge in International Perspectioe

monly, the na g of political will is waved along with a tone of moralexhortat ion .

While the notion of political will may seem intuitively obvious to someobservers, others have criticized' it as an analytic concept. Lynn M .Morgan (989) argued that efforts to explain Costa Rica's experience withprimary health care, through the concept of political will, end up beingmisguided, superf icial , and unhelpful . She questioned whether poli tica lwill ever existed in Costa Rica and showed how lise of that phrase hasmasked both domestic and international political processes. Alongsimilar lines. Paul B. Vitta attacked the notion that African countries"simply" need political will in order to enact effective technologypolicies, '';IS though all it requires is the pure act of ~Ipoli ty changing its'mind' from one state to another" (n.d.), More generally, Pranab Bardhannoted that chronic failures of policy implementation in the Third Worldare often ascribed to "a lack of 'political will' (whatever that means) ora lack of 'social dlscipllne" 0988:66). Other analysts have simi larlycriticized the pattern of blaming failure of policy implementation on a,lack of political will. Merilee S. Grindle and John W. Thomas, forexample, consider the term a "catch-all culprit " that has "li ttle analyticcontent," adding that "i ts very vagueness expresses the lack of knowl-edge of specific detail" (1991:122-124).

Yet political will remains an attractive phrase. The conferencesponsored by the Rockefeller Foundation in 1985 on "good health at lowcost" successfully established the concept of "polit ical and social will" asa necessary element in efforts by poor count ries 10 improve their healthconditions. The conference publication has become a basic reference indiscussions of the health transition, and the conclusive phrase on "will"has percolated into international discourse. For instance, a report onhealth research strategy for the World IJe;l1th Organization used thefelicitous Rockefeller phrase without citing its source. While notingproblems of incomplete conclusions, the WII0 report stated that "in aThird World country which seeks to progress rapidly, an essentialrequirement, and in a sense the starting point, is the political and socialwill to bring about improvement" (WHO 19H8:51 .

Papers inthe Rockefeller volume suggested two ways tooperatlonalizethe concept of political will. One operational indicator might begovernment legislation for social welfare. Patricia Rosenfield used"historical commitment 10 health as a social gO


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efforts and cri tica lly reflect on the concepts and contributions. Althougha central answer to the conference question (when does a society obtaingood health at low cost?) focused on poli tical commitment, the volumeincluded little systematic analysis of political factors. Even at the-end ofthe volume, the causal chain between pol itical will and heal th outcomesremained cloudy. To be analytically useful , the concept of polit ical wi llrequires at least a clear definition.

Davidson R. Gwatkin (979) used the concept of political will withmore :1113 lytic cue toex pia in India's aggressive pursu itof family planningin 197(1'S concerted strategy to become a "world medical power," in thewords of Fidel Castro, has generated bothmaterial and symbolic benefits(Feinsilver 1989). While not among the world's leaders inbiomedicalresearch, Cuba has achieved health indicators similar to those of richcount ries and has provided substantial medical assistance and servicesto other nations, especially in Africa. According to one assessment, theseactivities have created "legitimacy, prestige, and influence" for Cuba inboth domestic and international sphere; (Feinsilver 1989:26). TIre caseor Cuba demonstrates that health GIn be considered not only as an endin itself hut also as a means to other political and economic goals.

Another unanswered question is the inclusion ofK e ra la S ta te amongthe case studies, Kerala' s fame as an overachiever in heal th within India

. deserves recognition. But are the conclusions ofanalysis at tile subnationallevel of government applicable in other contexts for national govern-ments? For example, is political commiunent at a subnational l ev e l t he


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122 Health {rna Social Change in Internattonal Perspect ive

same as that at a national level?Also, do similar overachieving regions(with distinctive political traditions as found in Kerala) exist inother largeand complex poor countries, like China?

One paper in the Rockefeller volume on Kerala State did followappropriate principles of comparison by focusing on two subnationalgovernments. Moni Nag (1985) compared the impact of social andeconomic development on mortality in Kerala with that inWest Bengal.These two Indian states have similar standards of living and share anemphasis on education and a leftist political orientation, but havediverged historically in their mortality rates. A subsequent study by Nag(1989) pursued these differences for the two states and conduded thatKerala had stronger SOciopolitical movements ill rural areas and hadpolitical parties more oriented toward rural mobilization. These factorsgave rise to rural Kerala's greater political awareness, which contributedto more health facilities and their better utilization in rural Kerala than inWest Bengal. In his conduding paragraph, Nag noted that his conclu-sions at the subnationallevel supported the findings of another analyston political processes at the national level in developing cciuntries. Whilenot addressing the differences directly, Nag seemed to recognize thatsuch generalization took him out on an analytical limb.

A third issue not addressed in the Rockefeller volume was the strategyof analysis implicit inthe selection ofcases. One might learn just as muchfrom a comparative analysis of cases of poor health at high cost.Consideration ofseveral countries with high per capita incomes but poorhealth performances (such as some oil-rich nations) might help illumi-nate the nature of political commitment in different national contexts.Exploring government failures could help explain the limits of govern-ment expenditure in improving health conditions, especially how thestrategies and efficiencies of health expenditures relate to politicalbeneflts.Thls analysis could also provide a more critical view of calls forpolitical will.

Trade-offs: Intervention by governments to improve health can alsohave trade-offs, with both political and economic consequences. Theadvocates of government intervention rarely address the potential trade-offs of specific public programs or of broader social changes towardgreater equity. A reallocation of resources to improve the healthconditions of one group can impose economic as well as political costson other parts of society. 111at reallocation can occur across ethnic, class,or geographic lines. Deciding whether those trade-off." are justified

ThePolitical Economy of Health Transitions in the Third World 423

depends on a broader vision of social justice. Knowing a society's limitsin tolerating increased costs for particular groups requires a goodunderstanding of political economy.. The economic trade-offs of government interventions to reallocateresources to improve health take many forms. Government efforts toimprove equity may be accompanied by losses in efficiency. Theallocation of resources to primary health care, for example, couldimprove the access ofpoor people tohealth facilities, but atthe same timecould reduce overall productivity, especially if the supply system isunable to provide rural health workers with adequate materials. Theefficiency losses of government interventions in the market and theproblems of implementation are well portrayed by the advocates ofmarket forces (as discussed below). But advocates of governmentintervention tend to underestimate possible contributions of the marketin allocating resources to improve health (Reich 1987).

Economic trade-offs also arise inthe reallocation ofresources from thehospital sector to primary health care and from urban to rural sectors,which are considered key elements in achieving good health in poorcountries (Segall 1983). In most poor countries, the bias in developmentfavors the urban sector, through policies on agricultural and food prices,food subsidies, and foreign exchange and trade (lipton 19m. Reversingthis urban flow of resources would impose increased costs on urbanresidents, for example, through higher food prices, or in the health sector,through higher costs or reduced availability ofheaJth services. W. HenryMosley concluded, "111isgets back to a political commitment to equity"0985:244). While true, the statement does not help us understand whenthat political commitment can be implemented, or what kind of politicalregime can withstand the pressures of the economic trade-offs imposedon the urban sector,

TIle case of China pose. ') the issues of political trade-offs. China'shealth advances have depended on a strategy of mass mobilization innational campaigns that were centrally initiated and organized. From the19505through the 19~, China averaged four or five health campaignsa year (Jamison 1985:26). To an important degree , this s t ra t egy be longsto China's post-1949 authoritarian state with its emphasis on centralcontrol and mass mobilization. In short, the improvements in na1 iona lhealth may have depended on the limitations inpolitical liberty (and theircosts for certain groups in the population). The national campaigns ofmass mobilization for health improvement bear striking and troubling


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1.N "i'lI ltb and Social (.'floIlR!' in !lIfel7lalitll7all'c/:o/I('ctiIJl?

resemblance to the destructive campaigus of the Cultural Revolution.Theeffectiveness of China's health campaigns may have required therepressive national political economy. If so, could poli tical and economicliberalization in China contribute to ,I slowdown in heal th advances?More broadly, to what extent arc health improvements and democracyincompatible in China?

Poli tica l commitment to equity thus is not costless. ' I11e reallocationof sod", resources through revolutionary processes, in particular, canimpose substantial costs in the restriction of personal freedoms and theInss of lives.Yet analyses of China 's health achievements rarely considert he h ea lt h costs of social revolution or e ls e m e nt io n them only briefly inpassing (Chell 19HR:2!)7) . The experiences of the Soviet t Inion, with itshistory of gulags, i llustrate similar problems, although 11iecosts imposedin that country are more readily admitted and the health achievements'Ire not held up today as an international model for replication.

Finally, an ideological commitment to equity may he a necessarycomponent for government intervention to improve heal th (Caldwell1986; Reich 198811),hut i t rarely is sufficient . The Soviet Union providesa striking example of how polit ical commitment to social equi ty throughgovernment intervention in health can f a ll sho rt of the original ideals andhopes for socialized medicine. The mortality increases and qualityproblems in the Soviet health system are well recognized today (Davisand Feshhach 1980; Eberstadt 1988:11-33). As Mark G. Field (990)observed, the Soviet health system illustrates how noble purposecombined with flawed execution to produce mixed results. Elsewhereas well, recommendations [or government intervention and politicalcommitment, which ignore the vast obstacles to implementation and thepotential problems of centralized control, are unlikely to achieve thedesired results.

Tbe Nature ofI'olitical Regimes: Political scientists have comparedregimes for qui te some lime in efforts to determine whether one type is"better" than others for social welfare. Studies in the 19(,0,< ;and 1970ssought to relate regime characteristics, such as civil versus military, todifferences in public policy or economic performance. The analysesgenerally concluded that other variables (such as socioeconomic factors)provided greater explanatory power (Bossert 1983). Since the late 19705,however, studies have moved beyond the simple distinction betweencivil and !I1ilit al )' regimes to find more complex sources of variat ions in

J 1 . w Political Economy f! f Health Transitions ill the Third \'(fodd 425

political regimes that affect the adoption and imp lementa t ion of puhlicpolicies in tile Third World (Stepan 1978; Cleaves 1980) .

The impact of regime type on heal th remains relatively unexplored.One analysis of the causes of sickness and well -being for nations ignoredregime type almost completely (Sagan 1987). In the Rockefeller volume,only Patricia L. Rosenfield (985) attempted a direct comparison ofpolitical regimes. She noted that the "poli tical economic orientations varyboth between the examples and over time within each situation." Inconclusion, she stated, "On the basis of these four examples, no singlepolitical or economic approach can claim greater facility in creatingcond itions conducive to the improvement of health" (Rosenfield 19R. Status quo regimes that are threatenedwith instability have a greater incentive to adopt there policies. as an


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42(i H('0/1/.1am!Social Chmp/! ill International Perspectioe

droit to coopt potential rural support to opposition. "In a status quoregime, instability may be an incentive to adopt minor reforms, The statusquo regime that was unstable - Guatemala - was one of the firstin theworld to adopt the reforms" (1983:436). Without that threat, stableregimes (like pre-1975 S01110zaNicaragua) have little incentive to adoptsuch reforms.

lsossert reached similarly complex conclusions about implementa-tion, although Single dimensions of regime characteristics tended toshow greater influence on these processes. Weak and unstable regimes(Honduras and Guatemala) showed a lack ofcentra Iization and integra-tion, two important variables for successful implementation, in contrastto the strong and stable regime ofCosta Rica.Bossert suggested that weakand unstable regimes may not design policies that can be effectivelyimplemented because of the potential threat that a successful programwould pose to political and economic elites. Moreover, when weak statesdo design primary health care-policies they are more likely to dependon foreign funding (such as Guatemala), in contrast to strong states(Costa Rica) that can allocate national resources to rural areas.

Bossert's overall conclusion stressed the importance of regimeanalysis. "At the very least, this study suggests that advocates of policychanges take into account regime characteristics when they design'strategies for the adoption and the implementation of preferred policies"0983:438). 'Ole nature of the political regime will affect the publicpolicies for health, and thereby (presumably) will Influence healthoutcomes. Bossert's analysis also suggests that in addition to the regime,one must also understand the role of political and economic interests insociety.

Th e Role of Interests: Appeals for government intervention in healthand for political commitment to equity 'often approach these asdisinterested concepts and nonnative values, to be accomplished forhumanitarian goals. Only rarely do the appeals recognize that politics isnot simply a residual variable in public health but a primary determinantof who gets what, and thereby has a major impact on health S1


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128 f{CYlllb (Iliff Social OW/IRt! ill International Perspective

The second alternative proposed by Bates views governments asagencies that seek to retain power. Governments design pol icies andprograms to secure control over the majority of the population andthereby to remain in power. Bates argues that this approach helpsexplain how African governments can "get away" with policies thatadversely arred the interests of most [armcrs 098Ra:351-356). Govern-ments use agricultural policies to organize a rural constituency and todisorganize the rural opposition, through the allocation of investments,jobs and projects as forms of polit ica l patronage. In short, "public off ic ia lsare frequently less concerned with using public resources in a way thati s economically efficient than they are with using them in a way that ispolit ica lly expedient" (Bates 1988a:352). In hoth organizing a ruralconstituency and discouraging a rural opposition, governments useregulated markets for political purposes in order to maintain socialcontrol and retain governmental power.. The polit ical analysis of agricultural pol icy in poor countries has di rectrelevance for health policy. More analysis is needed o r the political

determinants of heal th policy in poor countr ies, especial ly the influenceof private interests on government intervention in health and thegovernment's LIse of public health resources to protect its access topower.

The analysi s of governments as agents of private interests appearedin several chapters of the Rockefeller volume. For example, the historical.strength of competitive political processes in Sri Lanka (Gunatilleke1985:122) and Costa Rica (Roseto-Bixby 19R5:126-127) contributed to aredistribution of political power to the rural poor, giving them greatervoice in the allocation of health resources. But the volume gave littleindication of how these four societies dealt with the most powerfulorganlzed interest group in health: physicians. Many analyses of heal thpolicy discuss conflicts between the interests of physicians and urbanconsumers who want high-technology medical care and the interest s ofrural residents and government of ficials who favor pr imary health care(Seg:lll 19R3). Itwould he instructive to know how the four cases of theRockefeller volume resolved this fundamental conflict in the distr ibutionof medical resources.

Hut few studies exist on how interest groups, such as physicianassocia tions. have influenced specific health policies in the Third World,~IS has heen done. for example, in Britain (Eckstein 19(-.0)and in_Tapan(Steslicke 1973). One observer of the lndian Medical Association

ThePolitical Economy (!f Health Transitions ill the Third \Vol'id 429

concluded, however, that the group "has not been notably successful inattempting \0 protect its narrow interests or otherwise to influencepolicy" (jeffrey 19AR:167). Understanding whether this pattern fits otherTIlirdWorkl countries, and the conditions under which physicians exertsubstantial inf luence on policy, represents an important area of inqui ry.julio Frenk and Avedis Donabedian have suggested a useful model forthinking about the influence of physician associations on health policy(1987:28-29); their idem; could be developed and applied in severalsettings to examine the mobil izat ion of interest groups that shape healthpolicy in the T hir d W orld countries.

Several studies exist of interventions in health designed to retainpower [or government organizations. China's emphasis on the massmobilization of a rural const ituency through public health campaignsprovided income subsidiesto people \VI1O need them mos t? " (P fe f fe rmann and Griffin 1989:23) . Theauthors answered their own question ear lier, by recognizing the politicalf()()Is (If income and consurnpt ion subsidies, which "are often distributedso as t


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1.m 1I('all" and Social Cbang ;/1 International Perspecttoe

policy, for example, to meet the demands of both domestic andinternat ional private companies, as occurred in Sri Lanka following thechange in political parties in power in 1977 (Lall and Bibile 1978). Andsome governments, such as Bangladesh, have been accused of introduc-ing rest rictive pharmaceut ical pol icies based on the concept of essentialdrugs, in order to serve the economic interests of individuals rather thanthe health needs of the public (Jayasuriya 1985). Overall, much morecould be done to analyze the role of interests in shaping and changinggovernment policy on health in poor countries and in producing better(and worse) health outcomes.Matkef Forces

Advocates of market forces to improve health conditions in poorcountries encounter many of the same problems shown by the propo-nents of government intervention. Those who call for the market as thesolution rarely provide cogent pol itical analysis. They often reduce theirrecommendations to the familiar neo-classical refrain of using a competi-live market to solve the problems of public services. Indeed, they viewgovernment intervention and polit ical processes as the sources of socialcost s that subvert and distort development in Thi rd World count ries (Lal1983). Overall, this school underestimates the problems of the marketan d overestimates the problems of government, while neglecting the roleof pol iti cs on both scores. Poli tical analysis of market forces to improvehealth conditions in poor countries needs to begin witb a concept of therole of the state in economic and social development, and then proceedto examine the selection of cases, the rrade-offs of markets, and the roleof interests.

Tbe Concept of tbe State: A tendency exists among some ma~ketadvocates to view the stale as equivalent to the government or the publicsector, or at least not to distinguish these as separate concept". Generalproblems of public administration in the Third World are then extrapo-lated to the state, leading to the conclusion that market forces must beunleashed. These concepts, however, are not one and the same. Theterm "government" usually refers to the official agencies directlyconcerned with the tasks of governance at the central and decentralizedlevels, while the "public sector" includes these plus a broader range ofinstitutions, particularly autonomous state-owned enterprises (Mamalakis1989: 104'i).

11}(! Po/jt ical Economy of Heahb Transitions itt the Third World 431

The concept of the state among contemporary social scientists isstrongly influenced by the work of Max Weber, who viewed the state asthe inst itutions that assert control over specific territories and the peoplewithin them. Followi ng a Weberian perspective , Alfred Stepan (l978:xii)provided this description: .

The state must be considered as more than the "government." Itis the continuous administra tive , legal , bureaucratic and coercivesystems that attempt not only to structure relationships betweencivil society and public authority in a polity hut also to struct.uremany


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protect (heir power, polit tcal leaders undermine the effectiveness of theagencies intended to carry out social policies.

Migdal's analysts suggest s that strategies designed to strengthen themarket and weaken the state are l ikely to have counterproductive results.In producing good health, the capacity to intervene effectively in societymay be more important than the maintenance of competitive markets.A similar argument has been made about the role of the strong"developmental" state in producing a healthy economy, especially for.1;I11


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434 Health and Social Chcl11gein International Perspect ive

rarely can improve policy performance, except under special conditions.Those conditions involve countervailing forces at the regional level toassure that the implementors ofpolicy act responsibly or face sanctions.Migdal held out little hope for the current vogue of solutions: "Newpolicies, management techniques, administrative tinkerings, more corn-mitred bureaucrats are al l inadequate to change the structural relationsbetween weak states and strong societies" (1988:277). One doubts hewould consider a call for good government as likely to be effective inproducing good health.

Trade-offs of Markets: In contrast to the advocates of government.intervention, who usually ignore the trade-offs of administrative action,the proponents ofmarket forces see mainly the trade-offs of governmentefforts. Birdsall characterized these twoworldviews as the public-interestand the private-interest perspectives of government. Additional consid-eration of this Manichean split is worthwhile.The public-interest view sees government intervention as essentiallypositive, contributing to the improvement of the entire community, andnecessary to foster development. In the health sector, governmentintervention is necessary to assure that the health transitions in poorcountries move in positive directions not only for the aggregate but alsofor specific groups. Government action could have positive outcomes,in terms of access to services or improvements in health, even if specificpolicies are implemented due to.pressure from self-interested groups.According to the public-interest view, government intervention isrequired because markets fail to produce public goods (preventivehealth services) or merit goods (freedom from avoidable death or i l lness)and fail to control bad goods (pollution ~ortraffic hazards).

Th e public-interest view has both proponents and critics. Proponentsconsider the concept of public interest as normatively essential. JamesW.Fesler, reflecting hisspecialization in public administration, embracedthe concept as an ideal 0988:897):Itis foradministrators what objectivity isfor scholars-somethingto be strived for, even ifimperfectly achieved, something not tobe spumed because performance falls short of the goal. If thereisnot apublic interest then we must denounce the idea ofideals ...

Bates, on the other hand, rejected the public-interest perspective asempirically unhelpful: A s noted above, he concluded that the public-interest objectives of governments do not explain the specific forms of

The Poli ti ca l Economy oj Healtb Trans it ions in the Third World 435

policy adopted 0988a:343-345). The views ofFesler and Bates may seemmutually exclusive, but are not necessarily so; one could consider thepublic-interest viewpoint as normatively desirable but empiricallyunachievable.

The private-interest school of thought on government takes thecritique one step further, rejecting the public-interest viewpoint onnormative grounds. In the private-interest view, the actions of govern-ment are intentionally designed to meet the personal interests ofpoliticians and bureaucrats, not to meet the needs of the population.Government intervention inevitably results in an inefficient allocation ofresources due to diversions to meet private interests. In health, forexample, the private-interest school would recommend against govern-ment provision of health services for the poor at no cost, since "mostresources are likely to go to support bureaucratic interests and to reachthe poor at higher cost to society than private, voluntary efforts would"(Birdsall 1989:97).

The interpretation of the private-interest view as emphasizing the"personal goals" ofbureaucrats isrejected by both Bates and Fesler. Batessupported a broader political interpretation of the private-interestapproach, with his interest-group model and power-maintenance moo-els to explain government policy, as described earlier in this chapter. AndFesler argued from personal experience, "No-one who has served inthegovernment, asIwas privileged to do, could suppose that the behaviorof career civil servants can be summed up as simply self-regarding"(1988:897).

While Birdsall did not advocate a pure private-interest worldview ofgovernment, she proposed partial adoption of market forces to correctfor the imperfections of government action. Her main recommendationswere selective user charges ("particularly charges to the nonpoor forprivate curative services"), decentralization of government services, andgreater government u se o f the private sector (1989:111).She argued thatthese "market oriented" policies would lead to more efficient andmoreeffective achievement of health goals than what might be called"governmen t -o r ien te d " po li ci es ,

TIle concept of selective medical user charges (MUC) has directparallels to the concept of selective primary health care (Walsh andWarren 1979). The latter stressed the point that government could notprovide all health services and therefore needed to focus on the highpriority, cost-effective items, Selective M UC suggests that government


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1.~" t tealtb (7/1dSodal r:bmrpJ' ill tnternattonat Perspectioe

should not charge everyone for all health services, but that those whocan pay should pay. Selective PHC argues that equity must be balancedwith efficiency in health care, while selective MUC argues that efficlencymust be balanced with equity.

The introduction of medical user charges inevitably arouses opposi-tion and imposes pol itical costs. The beneficiaries of free services resistthe idea of making even nominal payments. When the beneficiaries havestrong political allies, user charges become difficult, if not impossible, toimplement. In these GISes, the politi cal costs me perceived to exceed thefinancial benefi ts , in rich as well as poor countries. In the United States ,for example, political opposition in Congress and the Pentagon hasblocked efforts hy the Office of Management and Budget to introduceuser charges for medical services provided to military dependents andretirees. In 1986, when first proposed, reaction to the idea was so strongthat Congress passed a law banning such fees for two years (New YomTimes 1988) . Noone likes to lose existing benefits, and more powerfulgroups are better positioned to prevent the erosion of their interests.

The debate OVer rnedkal user charges in poor countr ies has focusedon the impacts on the poor. The market forces school has argued thatMues are good, because they raise money for the medical care systemand improve allocative efficiency (making prices approach marginalcosts) (de Ferranti 1985; jimenez 1986). The government interventionschool has responded that free access represents a basic right in manycountries and that the poor would suffer most from higher prices andreduced medical utilization (Cornea et al, 1987). Economic modelershave predicted that higher user fees in government cl inics would reduceutilization, especially among the poor; an d that in urban areas, poorpeople would probably substitute private care for the previous publiccare, unless private practitioners raised their prices (Akle rman andGertler 1989). Unfortunately, the modelers did not estimate the probabil-ity that such prices would rise in the private sector.

A fundamental problem with advocating greater reliance on marketforces to improve health condi tions in poor countries is that not enoughattention h;IS been given to the political consequences. One review ofthe "principle and practice" of medical user charges argued that effortsat cost recovery in the rural health sector are regressive an d that hospital-based fee systems could redress some inequities in society (Griffin19SR:36).Bur the author dkl not analyze the political obstacles to full costrecovery - mentioning political feasibility only once in rassing, in

'Ibe Political EC0170ll1Y of Health Transitions in tbe Third \'(I"ol"id137

.parentheses (1988: 11) and discussing pouucat costs in one paragraph inthe next-to-last Appendix (1988: 76). He concluded that "loans or outsideassistance" would be needed to compensate for the political costs andto assure "careful t iming." In short , polit ical feasibil ity does not automati-cally follow economic rationali ty. These "market oriented" approachesinvariably confront Significant polit ical barriers; and market orientedeconomist s, ironically, end up recommending administrative interven-tion (by international agencies) to change the political cost-benefitcalculation.

Mmkefs and Interests: Proponents of market forces in the healthsector of poor countries tend to assume a separation between marketsand interests. These advocates see an idealized vision of the world, inwhich The Market ;lppears (or isa ssumed to be) immune to the influenceof polit ics. But in many poor countries, the prevailing reality approachesthe opposite: through various mechanisms, the market becomes part ofpolitics.

Bales identified severed ways that political actors take over marketforces in agricultural policy (19&Sa:355-356). Price controls below marketlevels for commodities create opportunities for huge profits and forallocating those benefits


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13R Hoaltb and Social Cbanee in International Perspective

Similar processes operate for health policy in poor countries. TIlenotion of an "unbridled private market" (Birdsall 1989:97) may representa theoretical standard against which some economists seek to measurethe efficiency of public health programs, but at least some analysts regardthis s ta nd s I'd as pie-in-the-sky reasoning forrich aswell as poor countries(Culve r 1982; Reich 1988a). Price cont rols on pharmaceuticals provideopportunit ies to allocate the benefi ts of profits to political allies, throughthe distribution of scarce supplies and through the allowance of blackmarket activity. Access to regulated markets for private services inproviding h ea lt h care an d inselling medical products, represents anotherway of dispensing polit ica l favors. Similarly, rat ioning of scarce resourcesand appointments to publ ic programs operate as pol itical processes inthe health field.

In Sh011, political elites have powerful incentives to use regulatedheal th markets to retain power by rewarding constituents and excludingopponents. Birdsall's notion that a market oriented approach "couldencOl~rage a reorienta tion of government's role toward 'public' goods,especially more public spending on basic care for the poor" (1989:111)ignores these basic polit ical reali ties . The implementation of selectivelJ~edical user charges could provide another area for "selectively"dispensing benefi ts to political allies. Studies on the political economy.of introdu:ing medical user charges would improve our understandingof ;Vho gams and who loses and how governments adjust the implemen-tation of such policies to fit local interests.

Advocates of market forces have recently begun to promote decen-tra liza t ion of government services, which is supposed to rn a ke the publicsector more responsive and accountable to local needs. But decentrali-z~tion can increase rather than decrease the political use of markets, asBirdsal l recognized, by creating opportunities for polit ically tied appoint-ments or by strengthening secessionist tendencies 0989:114). Thedecentralization of financing for social programs, in order to improvecentral budgets, can undermine the effectiveness of programs andexacerbate regional inequities (Pfef fennann and Griffin 1989:26). Evencalling decentralization a market oriented approach stretches the defmi-t ion of that concept.

India's long history (?f decentralized planning illustrates importantlimits of this proposed remedy. Since its First five Year Plan, India hassought to decent ral ize the planning and implementation of develop-ment. (0 achieve more efficient lise of resources and more equitable

17.Jf.! Political Economy of Health Transitions in {be Third World 439

distribut ion of benefi ts. The resul ts, according to one review, have been"dismal," despite the establishment of institutional structures thepancbayatt raj, at the local level (Rao 1989). "Under the prevailing socia lstructure and property relations, the rural elite has often come todominate these institutions and appropriated a major share of benefitsfrom development so that the improvement in the living conditions ofthe poor and the underpr ivi leged has been negligible" (1989:412).Without changes in the socioeconomic structure of rural society, throughpolicies oriented toward the poor and through effect ive social mobi liza-tion, decentrallzatlon is more l ikely to perpetuate rather than amelioratethe inefficiencies and inequities of the political use of markets indevelopment. In short, Migdal's notion of a strong state may be moreefficient and equitable in promoting development and social welfare forthe poor.

The likelihood of implementing decentralized planning increaseswhen political leaders perceive political needs or opportunities toexpand their constituencies. In the mid-1970s, decentralization stalled inKenya, despite the declarat ions of official policy, the incentives offoreignaid, and the dispatch of technical advisors. Only after a new presidentlook off ice in 1978 did implementation begin, because the leadersviewed decentralization as a convenient means to expand thei r poli ticalbase (Grindle and ,11Oma5 1991:90-91,140). Here, the polit ical cost-benefit analysis produced incentives that made decentralization bothfeasible and desirable for the political leaders. Whether the circum-stances of the rural poor consequently improved is uncertain.

Another popular solution, proposed by internat ional agencies, is toexpand the government's use of private sector strategies. One consultingcompany identified 17 "discrete privatization options" in the healthsector, ranging from the transfer of all curative services to the privatesector, to th e promotion of health maintenance organizations, to theexpansion of autonomy for public hospitals and other health facilities(Jeffers 1989). But even this explicitly pro-privatization review concludedwith a veiled warning that governments need "careful consideration"whether the supplier industry will remain competitive over the long term,implicitly recognizing, in the article's last sentence. the dangers ofbecoming a "captive of the private sector" 0989:12). In the absence ofperfect competition, privatization can produce a broad arena forpoliticalactivitles, in the assignment of contracts, decisions about fees, andpayment for services.

..:;;.",-. .... -


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410 Health and Social Cbange in International Perspeatoe

One could argue that the efforts by international agencies to increasethe use of markets in Third World countries, in the recent fashion of"conditional" loans, represents a form of administrative intervention inmarkets. These aid programs seek to reduce the state control of theeconomy by making loans "conditional" on cri tical changes in govern-ment services and policies, and thereby are supposed to increase overallefficiency and economic growth. The "conditions," however, oftenimpose costs on important political constituencies of the groups inpower. In effect, the promise of economic growth and the Jure ofcontinued aid represent a "bribe" to powerhoklers "to embolden themto incur the political cost of taking away rents from those who receivethem" and "to buyout some of the restrictive practices by which theycurrently hold the state together" (P. Mosley 1988:53).

This process of international influence, in Paul Mosley's metaphor, islike "persuading a leopard to change his spots" and requires carefulconsidera tion of political feasibility. In Mosley's sample, the twocountries that most fai thfully implemented World Bank conditionalpolicy-reform packages were Jamaica and Turkey, which had under-gone changes in government prior to signing the loan agreements. "Theimportant point isthat neither government was Significantly obligated tothe groups who could be expected to lose from a libera lization ofdomestic and foreign trade, or could be accused of inconsistency ofbetrayal of those groups if itwent ahead with an economic stabilizationprogram" 0988:78). Indeed, the new governments of these two coun-tries had already committed themselves to liberalization programs priorto completing the World Bank agreements.Interventions in national markets by international agencies thus areconstrained by the structure of political interests. The economic incen-tives of international persuasion work best when governments havealready decided to change their political spots. When pushed toeconomic brinks, the survival polittcs of most Third World governmentsdepend more on local constituencies than on world bankers. Govern-ment leaders are not easily persuaded by international agencies toimplement policies perceived as posing significant political costs toimportant constituencies, as illustrated by the case of agrarian landreform in the Phil ippines (Grindle and Thomas 1991:145).

The above analysis suggests that the market has a limited andcomplicated role to play in health transitions. One should not doubt theability of user fees, if properly managed, to improve the financial

Tbe Poli tical Economy of Health Trans it ions in 'be Third l.Volid 441

situation of health services in POOf countries. But the market (even amarket oriented approach) does not provide a panacea for the multipleillsof the health sector or for the problems ofdevelopment more broadly.Nor does the market necessari ly lead to better health for all . Any effortthat seeks to impose market solutions, without taking into account theimpact of political and economic interests, may end up creating moreproblems than it solves.Conclusion

Analysis or political economy constitutes an essential element inunderstanding health transitions in poor countries - something thatMarxian analysts have been saying for a long time. Simple calls forgovernment intervention or for market forces, as the method to improvehealth conditions in poor countries, are more likely to mystify andconfuse than to explain and clarity. Yet most studies of health transitionsinthe Third World, especially when carried out by economists or healthprofessionals, have underplayed and underanalyzed the pervasiveinfluence of politics.

From a political perspective, the two approaches of governmentinterventions and market forces are imperfect alternatives. Neitherstrategy is a magic wand to produce health for al l in Third Worldcountries. Political processes affect the design and implementation ofboth government policies and market mechanisms so that actual resultsoften differ dramatically from the stated or intended ones. Indeed, itseems likely that no Single path to good health exists. Each country mayneed to design it'>own combination of governments and markets toavoid the pitfalls and potholes that plague the implementation of policyand to arrange ~hepolitical costs and benefits so that stability and positiveoutcomes result.

TIle costs of seeking to impose a single solution, in hopes ofimproving health, need to be explicitly assessed. A strong state may beable to implement public health measures effectively (even ruthlessly).But that Implementation- may occur at great costs in terms of politicalliberty and human lives - as in. the case of China during the C u l t u r a lRevolution. And strong states do not necessarily produce health im-provements, as illustrated by the mixed achievements of the command-and-contml states of the Soviet Union and Eastern Europe CEherstadt1988:207-2";0).Similarly, a single-minded reliance on market forces mayunleash a plethora of health hazards associated with industrialization and


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112 Healtb and SocialCbauoe in International Perspective

urbanization along with positive health consequences for some socialgroups. The opening of Eastern Europe, for example, could contributeto continued deterioration inhealth conditions ifreliance on the marketresults in even worse environmental pollution or wider availability oftobacco products.

In order to understand how the politics of government') and marketsaffect health conditions, both positively and negatively, we need morepolitical inquiries into the patterns of health transitions in different kindsofstates. Analysis isalso needed of the values that underlie the evaluationof health achlevemeuts ;md the accompanying costs in different states,especially beliefs about how the state should relate to individuals insociety an d how to assess conflicts between slate power and individualfreedom.

Attention should also be directed to a third major analytic approachto health transitions in the Third World: that involving competitivepolitical markets, This approach stresses the empowerment of relativelypowerless groups in society, the development of mechanisms for stateand market accountability, and the emergence of nongovernmentalgroups that form coalitions and mobilize latent Interests, The experiencesof COSW Rica and Kerala suggest that these political processes played amajor role in shaping both government interventions and market forcesin directions that had positive health consequences - and with lowerhuman costs than the strong state approach to good health adopted inChina. .

This third approach would depend on the role of nongovernmentalorganizations (NGOs) as agents of political change in promoting goodhealth and development and in addressing the problems raised bygovernment-oriented and market oriented approaches. A growingliterature recognizes the potential contributions ofNGOs in development(Drabek 1987). NGOs have a number of comparative advantages over'states, especially in the quality of relationships with intended beneficia-ries and in the autonomy of choice in organizational design andobjectives (Fowler 1990a). A political analysis o r the role of NGOs insouthern Africa pointed out their potential in advancing democratizationbut also the efforts by national governments and international agenciesto contain NGOs (Fowler 1990b). Additional research is needed on thepolitical conditions in which NGOs can promote positive healthtransitions and how NGOs can manage the obstacles created by bothnational and international institutions.

The Political EC()noll~J' of Health Transitions in tbe Tbird World 443

NGOs have also demonstrated an ability to affect the health conse-quences of national and international markets. In the past decade,international networks of NGOs have emerged to exert increasinginfluence on markets of specific products and on the agendas ofinternational organizations (Reich 1991), The formation of internationalnetworks has resulted from two patterns of organizational development:the strengthening of domestic NGOs in poor countries and the interna-tionalization of existing groups in rich countries. On health andenvironment issues, examples include Pesticide Action Network (PAN),Health Action International (HAD, and the International Network ofVictims of Corporate and Government Abuse. The international linkagescreated and maintained by these networks hold the potential for politicalaction to reduce the negative health consequences of market orientedapproaches in both domestic and international markets. To understandwhen and how these networks succeed, additional research is neededon case studies and political strategies.

A final conclusion of this chapter is the importance of assessing thepolitical feasibility of policies to improve health conditions in poorcountries. Policy analysis needs to take into account the vast areas ofuncertainty that surround important social issues and the inevitableinfluence exerted by the values of administrators and experts, Analysisthat considers the political implications of policy proposals can heIpdecision makers and the general public "avoid both reckless underes-timation and harsh overstatement of the limitations of the possible inpublic policy" (Majone 1988:165). To do this, analysis must explicitlyrecognize how governments act as the agents of private interests, howgovernments act to retain power, and how markets become instrumentsof political organization. Lastly, greater attention needs to be directed tothe' international political economy and its impact on national healthpolicy and health conditions.Adenouiledgments

'I1Ie author appreciates helpful comments on earlier drafts fromBarbara Crane, Arthur Kleinman, Lynn M.Morgan, and Diana CooperWei!, and [rom participants at several seminars where the paper waspresented.


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114 Healtb Gild Social Chal1Re i7 7 International Perspectioe

Notes1 'J11e f ield of political economy covers a broad range of schools and traditions

that involve poli tical and economic analys is in var ious combinations. MartinStaniland (985) provides ;1 good map and guidebook to the array ofapproaches.These include: the new poli ti cal economy, which applies assump-tions of economic rationali ty to explain polit ical choices in society; "poli ticist"theorie s, which argue that power and political institutions take precedence inexplaining economic patterns in society; International political economy,which examines political and economic forces in the international arena andincludes schools of l lberal ism, reali sm, interdependence, and dependency; andMarxian polit ical economy, which includes several t radit ions wi th di fferen temphases on internal class structures and external capital inlluences.

2 Regarding the broad theoretical territory covered by pol it ical economy,S taniland (1985:198) wrote, "The term political economy, used generically,re fers to a continuing intellectual enterprise, a particula r agenda , a specificobject of theoreti cal ambition . Because 'poli ti cal economy' i san agenda ratherthan a me thod, there will always be a variety of theories of political economy.And because a variety of assumptions and values underlies such variety oftheory, i tmay he possible ( indeed, i t i svery desirable) to cri ti cize each theory;hut it will never be possible to decide between them, to end the debate, andto remove variety by purely logical means."

3 The growing literature on political economy of health in the United Statesincludes the following studies: R. R. Alford, Health Cam Politics: fdeologicaland Interest Gmuj} Barriers to Reform (1975); T. R. Marmor and j.' B.Christianson, Health Cate' Policy: A Political Economy Approacbc) 982); P. Starr,TbeSocial Transformation ojA merican.Medicine (1982); L . D . Drown, Politicsand Hea{tb Cam Organization: HMOs as Federal Policy (1983); P. J. Feldstein,11 .1 Politics of Healtb Legislation: An Economic Perspeciioe (988); D. M. Fox,Heal th Pol icies, Health Pol it ics: Tbe Bri tish and American Experience, 1911-1965(986).

4 These two broad approaches, government interventions and market forces,represent a heu ristic dichotomy to characterize studies of the polit ical economy.of health transit ions . Some studies, however , may not f it easily in these two neatcategories. Fo r example, I have not included many studies of internationalpolitical economy of either the dependency or the interdependence type(although the first would probably fit in the government intervention ap-proach , whi le the second would he compatible with the market forces school ).Similar ly , Marxian analyses would fit best in the government interventionapproach , although such s tudies also have problems in their poli ti cal analysi s.Fina lly, the analysis of new non governmenta l and non market actors does notf it well in either nonnative school; I discuss some implications of these newactors in the chapter 's concluding section.S In fare circumstances, when fanners are well organized and connected tonational eli tes, sufficient polit ical pressure can be exerted to shape governmentpolicy and resist efforts to push down agricultural prices. In countr ies wherecompeti tive elections occur on a regular and fair h; ]s is . :1I1mrhn ;ntprp!


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