Overview of the 2007-2008 CX Topic

by

Christa Bieker

Policy Analyst

National Center for Policy Analysis

Resolved: The United States federal government should substantially increase its public health assistance to Sub-Saharan Africa.

                                   -- 2007-2008 CX Debate Topic Resolution.

This document has been updated as of 8/21/2007.  The new material is in bold.

Table of Contents

1. A Debate Already Underway
2. A "Solution" Already Underway
3. What is Public Health?
4. Health Crisis in Sub-Saharan Africa
5. Causes of the Crisis
   1. Problem: Sub-Standard Living Conditions
   2. Problem: Lack of Health Providers and Health Infrastructure
      1. Case Study: Botswana
      2. Brain Drain
      3. Is Medical Tourism a Solution?
   3. Problem: Poor Education Systems
   4. Overcoming Obstacles to Good Health Outcomes
6. Wealthier is Healthier
   1. Evidence from Developed Countries
   2. Evidence from Less-Developed Countries
   3. Case Studies and Comparisons
   4. Effects of Education on Health
   5. Wealth and Health: Debate over Cause and Effect
   6. Why This Issue Is So Important
7. Why Are Poor Countries Poor?
   1. The Poverty Trap
   2. The Bad Government Trap
   3. The Conflict Trap
   4. The Natural Resource Trap
   5. The Landlocked with Bad Neighbors Trap
8. What Difference Has Foreign Aid Made?
   1. Opportunities Missed
   2. Foreign Aid and Economic Growth
9. Foreign Aid: Is the Cure Worse than the Disease?
1. Economic Studies
2. International Agencies
3. Non-Profit Organizations (NGOs)
4. Aid Dependence
5. Corruption
6. Misplaced Priorities
7. Market Distortion
10. Can Foreign Aid be Made to Work?
    1. Jeffery Sach's Top Down Approach
    2. William Easterly's Bottom Up Approach
       1. Don't Give People What They Do Not Want
       2. Creative Economic Incentives for Success
       3. Create Measurement and Feedback Mechanisms
       4. Focus on Small Interventions with High Payoffs
       5. Avoid Governments
    3. Collier's Third Way
11. Alternative Strategies for Africa
    1. Promoting Economic Freedom
    2. Promoting Foreign Investment and Capital Accumulation
    3. Promoting Intellectual Property Rights
    4. Strengthening Private Sector Institutions

Overview 

      This year's debate topic provides an opportunity to examine an oft-neglected part of the world:  Sub-Saharan Africa, a region composed of 48 countries south of the Sahara desert. 

      The focus on this region is timely.  The United States has economic, strategic and humanitarian reasons to care about Africa.  First, as the U.S. seeks to reduce its dependence on oil from the Middle East, attention will shift to Africa.  The region already supplies the U.S. with 18 percent of all oil imports and production is expected to double within the next decade.  Second, Africa is becoming a key front in the war against radical Islam.  Terror networks have been spreading in the region, and al Qaeda operations were well-established in Sudan before shifting to Afghanistan.  Third, Sub-Saharan Africa is one of the most impoverished and diseased areas of the world.  According to the World Bank, Sub-Saharan Africa contains the largest number of people living on less than one dollar a day.  Sadly, millions of people in the region die every year due to preventable diseases.[1]   

      This year's topic calls on the U.S. to assist Sub-Saharan Africa by providing more public health assistance.  However, this type of foreign aid could actually make conditions worse.  Evidence demonstrates that economic growth is a much more powerful way to improve health outcomes. 

A Debate Already Underway

      Fortunately, this year's debate topic is also the debate topic of the moment in international circles among economists intimately involved in foreign aid and economic development.  There are four must read books and one report that cover the most important issues in this debate and references to all of the best literature on the subject.[2]

      For the Affirmative, Columbia University economist Jeffery Sachs makes the case for a large increase in aid to Africa and other poor countries in The End of Poverty.  Sachs is the person most responsible for devising the privatization plan implemented in Russia following the collapse of communism.  He argues that the world's poor are caught in a "poverty trap," in which poor health, poor education and poor infrastructure reinforce one another.[3]

      To solve these problems, Sachs calls for a "big push"-involving billions of dollars of additional aid from developed countries-to support 449 separate aid programs, including nitrogen-fixing leguminous trees to replenish soil fertility, antiretroviral therapy for AIDS, specially programmed cell phones to provide real time data to health planners and 12-cent medicines for children with malaria.  As chair of a World Health Organization (WHO) commission, Sachs authored another must read document, arguing that the developed world should provide less developed countries with the funds to double the percent of their national income spent on health care.[4]

       For the Negative, William Easterly is a former World Bank economist who is now a professor at New York University.  His book, The White Man's Burden, is a powerful and shocking indictment of foreign aid in general and the ideas of Jeffrey Sachs in particular.[5]

      Easterly is personally in favor of privatization and he favors free markets.  But he, along with quite a few others, thinks that Sachs' plan for Russia has been a disastrous failure.  He also believes that big push foreign aid plans of the past have been failures and all future ones are also likely to be failures.  The source of all these failures is the belief among Western bureaucrats and intellectuals that we can plan and fund schemes to reform countries in which people have cultures and economies and political systems much different from our own.

      Easterly completely rejects Sachs' idea of a poverty trap.  Countries can and have escaped poverty on their own, without any significant foreign aid.  The problem is not a poverty trap; rather it is a bad government trap.  Countries are kept poor by the political and economic policies of their governments and there is not a whole lot that the developed world can do about it - except avoid making things worse.

      A third scholar is Paul Collier, a former World Bank economist who is now a professor at Oxford University.  His book, The Bottom Billion, is a sort of third way approach to the problem.  Like Easterly, Collier rejects the idea of a poverty trap and endorses the idea of a bad government trap.[6]  (Sachs, by the way, does not think bad governments are a serious problem.)

      However, Collier believes there are three other problems: a conflict trap (civil wars and coup d'etats), a natural resources trap (over dependence on oil or diamonds, for example) and the trap of being land locked with bad neighbors.  Collier is not against foreign aid.   He would like to see it work.  But unless foreign aid deals with these traps, he argues, it is unlikely to be successful and may do more harm than good. We take a closer look at these ideas below.

      Clark says that most less developed countries are caught in a fifth kind of trap: the Malthusian Trap, named after the 19th Century British demographer Thomas Malthus.  In the absence of Western intervention, many people in these countries would be living at a subsistence level of income--with populations expanding and contracting to match the availability of local resources.  However, Western public health aid unnaturally extends life expectancy without doing anything to raise productivity or national income.  As a result, we are left with a larger population living off of a fixed supply of resources.  The result is a standard  of living even lower than the subsistence level-perhaps the lowest standard of living in the history of the world!

Is A "Solution" Already Underway?

What Is Public Health?

      "Public health" is a broad concept that encompasses any organized community effort to prevent and/or treat diseases and conditions that harm (or could potentially harm) the physical and mental well-being of the members of a community.  The term refers to some aspects of a society's system of health care delivery, its physical infrastructure (including access to clean water and sewage systems) and its educational system.  The "public" aspect usually involves government allocation of resources (taxes) and management of people (police powers), but can include purely voluntary efforts by nongovernmental organizations (NGOs).  The "health" aspect has less to do with the delivery of health care to individuals than with health-promoting measures that affect a community's mortality and morbidity.  These activities can be quite important.  A handful of public health measures - specifically sewage treatment, water disinfection and communicable disease vaccination programs - were responsible for most of the increase in human life expectancy in the United States in the 20^th century.[7] 

      The field of public health involves more than 50 professional disciplines, according to the American Public Health Association, and like other activities in which the government plays a leading role, its scope has gradually expanded to encompass measures that were not traditionally included in public health.  Current, commonly-accepted definitions paint a broad picture: 

• The U. S. Department of Health and Human Services defines public health as "the science and the art of preventing disease, prolonging life, and promoting physical health and mental health and efficiency through organized community efforts toward a sanitary environment and the control of community infections."
• The Association of Schools of Public Health defines it as "money, property, services, or anything of value transferred to enhance the science and art of protecting and improving the health of communities through education, promotion of healthy life styles, and research for disease and injury prevention."

      Thus, public health assistance covers all interventions that improve health outcomes in a community, including direct medical aid (immunizations, treatment, and so forth), education on healthy living, and providing improved living conditions like clean water, waste removal and housing.  Today, it even reaches into such nontraditional areas as advocacy of gun control (injury prevention) and distribution of condoms (HIV/AIDS control).  (For economic rationale for distinguishing between private health and public health see Message to Debaters.)  

Health Crisis in Sub-Saharan Africa

      The health status of Sub-Saharan Africans is among the worst in the world. Consider:

• Sub-Saharan Africa is home to the shortest life expectancies in the world; in fact, 39 of the 40 countries with the lowest life expectancies are in Sub-Saharan Africa.[8]
• The average life expectancy for all of Sub-Saharan Africa is only 46 years, versus 78 years in developed nations.[9]
• Sub-Saharan Africa also has the worst infant mortality rate in the world, with an average of 96 deaths per 1,000 live births, versus 5.7 in developed nations.[10]
• A child born in Niger is 40 times more likely to die before her fifth birthday than a child born in the United Kingdom; and a 15-year-old boy born in Swaziland has only an 18 percent chance of living to age 60, versus a 91 percent chance in Switzerland.[11]

      Problem: The Rampant Spread of Preventable, Treatable Diseases.  The populations of Sub-Saharan Africa are ravaged by diseases that have largely been eradicated - or at least controlled - in other parts of the world.  [See Table I.]

• Some 70 percent of the global total of HIV-positive people - 28.5 million people - live in Sub-Saharan Africa.[12]
• In seven Sub-Saharan countries, one-in-five adults is living with HIV; in an additional five countries the adult HIV infection rate is higher than one in 10.[13]
• Over 100,000 African children die of measles each year.[14]
• Some 350 million to 500 million cases of malaria occur worldwide, and most are in Sub-Saharan Africa.[15]
• One-half million Sub-Saharan Africans die of tuberculosis each year.
• The nations of Sub-Saharan Africa also struggle with respiratory infections such as influenza and pneumonia.

TABLE I

Communicable Diseases in Sub-Saharan Africa

*Figures for HIV/AIDS, tuberculosis, respiratory infections, and measles include only adults.  The figure for malaria and Dengue fever include children and adults.

Source: World Health Organization, World Health Statistics 2007

      In poor regions of the world, including most prominently Sub-Saharan Africa, the vast majority of child deaths are preventable or treatable given our current knowledge, according to Princeton University's Angus Deaton.[16]

Causes of the Crisis

      How is it that in the 21st century - with all our accumulated knowledge about disease transmission and our technological prowess - the 10 percent of the world's population that lives in Sub-Saharan Africa faces such a dire existence?  The health crisis in Africa stems from public policy failures ranging from the general prevalence of poverty to specific inadequacies of the health care system (including too few doctors, nurses, hospitals and medical supplies), to impoverishing education systems.    

      Problem: Sub-Standard Living Conditions.  In his review of the literature, Deaton shows poverty is a leading cause of mortality in lower-income countries, and Africa is one of the most impoverished areas of the world.[17]  In the past quarter-century, when one-half billion people managed to escape poverty around the world, the number of poor people in Sub-Saharan Africa nearly doubled.[18]  In fact, nearly half of Africa's population lives on less than $1 a day![19] Moreover, although this area contains one out of every ten of the world's population, its total economic output each year is no greater than the size of Belgium.[20]

      Many families in countries throughout the Sub-Saharan region lack the basics of life.  They live in housing that is substandard by any definition, lacking, for example, window screens to keep out disease-bearing insects.  They have no access to clean drinking water or basic sanitation.[21]  These conditions cause disease to spread rapidly.  Further, famine, which is pervasive across the region, exacerbates the spread of disease because malnourished individuals are less able to fight off infection or recover from illness.   

      Problem: Lack of Health Providers and Health Infrastructure.  The state of a country's health care system - and a country's ability to commit resources to address health needs - has been a major determining factor in reducing mortality rates around the world.  Impoverished regions like Sub-Saharan Africa lack needed resources to provide health care and prevent the spread of disease.  In fact, a recent examination published by the World Economic Forum shows more than half the population of Sub-Saharan Africa lacks access to even basic health care services, either because they cannot afford them or because services simply do not exist in their communities.  By contrast, wealthy countries have the infrastructure to combat diseases and can commit their vast wealth to achieve great improvements in health. 

      In many Sub-Saharan African countries, medical aid cannot be used effectively because the health infrastructure is inadequate, including a lack of facilities, trained personnel and medical supplies.  Donated drugs and supplies are often rendered useless because Sub-Saharan countries lack the networks to deliver the medicine to those who need them.[23]

      Case Study: Botswana.  In Botswana, for example, Merck, Bristol-Myers Squibb and the Gates Foundation created a program designed to give every single one of Botswana's infected citizens antiretroviral therapy (ART) to treat AIDS.  Merck donated its anti-HIV drugs, Bristol-Myers Squibb discounted its AIDS drugs, and the Gates Foundation subsidized the efforts with $100 million.  However, with no medical school Botswana lacked sufficient health-care workers to implement the program.  For four years, the program was only able to treat pregnant women with AIDS, HIV-positive children in hospitals and HIV-positive patients with TB.  The program's goal of reaching all patients with severe HIV was postponed until Botswana could recruit health care workers to the country and build the necessary laboratories and clinics.[24] 

      Brain Drain.  In countries that do have medical schools, doctors often move to Britain, the United States, or other developed (OECD) countries once they have graduated, a phenomenon called "brain drain."  Brain drain is a primary cause of the shortage of trained health care personnel in Sub-Saharan Africa: 

• The American Medical Association reveals that 5,334 physicians trained in African medical schools were licensed to practice medicine in the United States in 2002.[25]
• About 50 percent of medical school graduates from Ghana emigrate within 4.5 years, and 75 percent within 9.5 years.[26]
• During the 1990s, 1,200 physicians were trained in Zimbabwe; only 360 were still practicing there in 2001.[27]

      There is very little incentive for physicians to practice in the region because of the shortage funds to build clinics or compensate doctors for the care they provide.  In addition, those who obtain medical training in the West often do not return because the opportunities afforded them in Africa are not as lucrative as in Europe or America.  Medical graduates often must repay large student loans - making it even more difficult to practice medicine in Africa where many patients cannot pay for treatment.

      Is Medical Tourism a Solution?  Establishing a lucrative medical tourism industry where physicians could treat patients from Britain or elsewhere and use the proceeds to cross-subsidize health care for the local indigent population would help alleviate the problems of brain drain.  This is already occurring in South Africa - which has a long history of innovation in health care.  In the past, much of medical tourism was cosmetic in nature.  However, it is increasingly common for patients to travel abroad for a wide range of medical treatments.

      Problem: Poor Education Systems.  African literacy rates are among the worst in the world.  This is disturbing because a lack of education is one of the most prominent reasons for the poor personal choices that lead to bad health outcomes.[28]  Many Africans have inaccurate information about safe health practices and believe myths about how infections like HIV and malaria are transmitted.  For example, when the Ebola epidemic hit Zaire in 1995, many Africans believed it was the work of an exceptionally evil spirit and held ancient ceremonies to purge the spirits.  Even after international relief organizations arrived to treat infected individuals and help stop Ebola's spread, many local people believed the epidemic was caused by an American missionary physician who was capable of transforming himself into a hippopotamus and trawling the Kwilu River to perform ominous spiritual acts.[29]  Discussion of these beliefs in witchcraft is taboo in aid agencies, because nobody wants to reinforce ill-informed stereotypes.  Unfortunately, because many people do believe that witchcraft causes illness and turn to traditional healers instead of doctors, political correctness has inhibited effective public health interventions.[30] 

      Education that addresses traditional beliefs of the local population is a powerful tool for reducing the incidence of disease because it empowers people to make better health care choices.

      Overcoming the Obstacles to Good Health Outcomes.  How have wealthy, developed nations managed to overcome these diseases?  What is Africa doing wrong?  See the sidebar, "Malaria in Africa," for a case study on the contrast between disease prevention by rich and poor nations.   The unconscionable plight of Sub-Saharan Africans is a direct consequence of the public policy choices their governments have made.  How can the region improve?  Some ideas are proposed in the following sections. 

Sidebar: Malaria in Africa

In the mid-19^th century, malaria was an epidemic around the world, even in the United States.  But by 1950 - due to large government works projects and the application of new health innovations - malaria had been eradicated in the U.S.[1]  However, malaria still plagues Sub-Saharan Africa: 

• The World Health Organization estimates there are 300 to 500 million cases of malaria each year, and more than 1 million deaths due to the disease.[2]
• Some 90 percent of all malarial deaths occur in Africa.[3]

Fighting Malaria in the United States.  How did the United States eradiate the disease, while Sub-Saharan Africa is still in the throes of it?  The United States had the capacity to initiate large-scale public works programs funded by a stable, wealthy government:

• In 1942, the United States Public Health Service created the Office of Malaria Control in War Areas to control the spread of the disease by draining swamps, oiling the water where mosquitoes reproduced and putting mesh screens on homes.
• In 1947, the National Malaria Eradication Program - a joint effort by state and local health agencies of 13 Southeastern states and the federal government - was formed and began spraying homes with insecticide.
• Malaria, which totaled 15,000 cases in 1947, was eradicated in the U.S. three years later.

In addition, the U.S. was able to adopt and employ the latest technological innovations, the most prominent of which was Dichloro-diphenyl-trichloroethane, or DDT. 

Fighting Malaria around the World.  Thanks to the low cost of DDT and a desire to improving living conditions around the world, several initiatives were developed to eradicate malaria worldwide.  For example, the World Health Organization (WHO) began an effort to eradicate the disease by spraying with residual insecticides, using anti-malarial drug treatment and promoting education about the disease.

The effort was successful in largely eradicating malaria in regions with temperate climates and seasonal malaria transmission; some countries were less successful (such as Indonesia, Afghanistan, Haiti, and Nicaragua).  Unfortunately, most of Sub-Saharan Africa was simply excluded from the campaign. 

According to the Centers for Disease Control and Prevention, the primary factors prohibiting the eradication of malaria in regions like Sub-Saharan Africa are both technological and political:  1) The emergence of resistance to inoculation and the insecticides made available to these countries, 2) wars and massive population movements, and 3) lack of community participation. 

The War against DDT.  There have been other institutional roadblocks to Africa's eradication of malaria.  In addition to the factors indicated elsewhere in this paper, African governments also faced resistance to DDT by environmental groups in the developed world who were willing to put politics before health. 

• In the early 1970s the Environmental Protection Agency in the United States along with most developed countries banned the use of DDT.
• The WHO also replaced DDT with less effective pesticides to fight malaria.[4]

However, in May 2006, U.S. AID reversed more than 30 years of policy by authorizing the use of DDT to combat malaria in Africa.  In the same year the WHO announced that DDT would be its primary weapon to combat malaria.[5]

Sub-Saharan African governments lack the capacity to create large scale programs like the ones created by the United States.  Corruption, instability, and insufficient funding make it impossible for the government in the region to solve these major public health problems. 
 

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[1] Richard Tren and Philip Coticelli, "How DDT Can Stop Millions of Malaria Deaths," Mail and Guardian, November 9, 2005.   

[2] "Frequently Asked Questions about Malaria," Fact Sheet, Centers for Disease Control and Prevention, February 2005.  Available at http://www.cdc.gov/malaria/faq.htm. 

[3] Richard Tren and Philip Coticelli, "How DDT Can Stop Millions of Malaria Deaths," Mail and Guardian, November 9, 2005.

[4] "DDT Ban Takes Effect," U.S. Environmental Protection Agency, December 31, 1972.

[5] Bonner Cohen, "Uganda Will Use DDT to Fight Malaria," Heartland Institute, April 1, 2007.

Wealthier Is Healthier

      Wealthier populations live longer than those that are poorer.  Economist Angus Deaton shows a lack of income is a leading cause of the high mortality rates in lower income countries.[31]  In fact, any number of poor health outcomes from infant and child mortality to malnutrition are consistently linked to lower incomes.  On the flip side, as incomes rise, health outcomes improve.  Deaton found that for every percentage point of economic growth, infant mortality falls by a quarter of a percent.  (For the economic explanation see NCPA President John Goodman's Message to Debaters.) 

      Evidence from Developed Countries.  In general, the higher one's income, the more options individuals have to change their lifestyles, regulate their diets and select their risks.  Higher incomes open the door to literally thousands of opportunities to improve health and safety.  For example:[32]

• In England, adult males in the highest socioeconomic class earn more than twice as much as individuals in the lowest socioeconomic class.
• Death from cancer among males in the highest socioeconomic class is 25 percent below the national average and death from respiratory disease is 63 percent below average.
• In contrast, among males in the lowest socioeconomic class death from cancer and respiratory disease is 31 percent and 87 percent above the national average, respectively.

       Similar evidence exists for the United States. One study of mortality and income for U.S. counties found that a 20 percent increase in income reduces mortality by 1.0 percent.[33]  Based on this study, Peter Huber calculated that increasing the income of a 45-year-old male manufacturing worker by 15 percent would do more to extend his life expectancy than eliminating every single hazard from his workplace.[34]

Sidebar: Determinants of Mortality

       Consider how life expectancies and infant mortality rates have improved dramatically around the world.  For much of human history, life expectancy has been very short:  around 25 years for our hunter-gatherer ancestors to 50 years by the early 20^th century to 77 years today in Western Europe. [1]  This is largely due to the near elimination of deaths from infectious diseases, especially among children:

• From the mid-18^th to the mid-19^th century, improved nutrition and economic growth played a large role.
• From the mid-19^th to the mid-20^th century, the improvement of basic living conditions, including clean water, waste removal and the evolving role of personal health practices had a dramatic effect.
• Finally, more contemporary times have been marked by technological breakthroughs such as the germ theory of disease, development of new medicines, vaccinations and antibiotics, and so forth.

      Until the 1940s, these innovations were limited to the developed world.  But a wave of global drug innovations (including the mass production of penicillin), inexpensive DDT and the establishment of global health initiatives allowed the exportation of health innovations in the industrialized world to be transported to developing countries.  Mortality rates around the world improved as tuberculosis, malaria, pneumonia and other diseases declined.[2]  Even in Africa, life expectancy rose by 13 years from the early 1950s until the late 1980s - but then the rampant spread of HIV/AIDS reversed the trend.[3]  Now the life expectancy in Sub-Saharan Africa is only 46 years.[4] 

 

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[1] David Cutler, Angus Deaton and Adriana Lleras-Muney, "Determinants of Mortality," National Bureau of Economic Research, Working Paper 11963, 2006, as encapsulated in "The Determinants of Mortality," NBER Journal on Aging and Health, National Bureau of Economic Research, Spring 2006.  Available at http://www.nber.org/aginghealth/spring 06/w11963.html.

[2] Daron Acemoglu and Simon Johnson, "Disease and Development: The Effect of Life Expectancy on Economic Growth," National Bureau of Economic Research, Working Paper 12269, May 2006.  Available at http://www.nber.org/papers/w12269.

[3] "The Determinants of Mortality," National Bureau of Economic Research.

[4] World Bank, World Development Indicators Database

      Evidence from Less Developed Countries.  World Bank economist Lant Pritchett and former U.S. Treasury Secretary Lawrence H. Summers have studied the relationship between income and health worldwide.  They conclude:[35] 

• If incomes were just 1 percent higher in the developing countries, between 33,000 and 53,000 child deaths would be averted annually.
• More than 450,000 infant deaths would have been averted had countries been able to maintain the same rate of growth in the 1980s as in the period from 1960 to 1980.
• Some 400,000 of these infant and child deaths occurred in Africa and Latin America.

      Case Studies and Comparisons.  Within Sub-Saharan Africa, stronger economic growth is correlated with lower rates of disease infection, including HIV/AIDS.  For example:[36] 

• The Central African Republic had a gross domestic product (GDP) per capita of only $227 and a 1 percent growth rate in 2005; the rate of HIV/AIDS infection was 13.5 percent of the adult population, one of the highest in the region.
• Angola, on the other hand, had a GDP per capita of $891 and an 11 percent growth rate; the HIV/AIDS rate is one of the lowest in the region (3.9 percent).

      Contrast the experience in Africa with Hong Kong, which was once an impoverished area.  Hong Kong has achieved strong economic growth by becoming the freest market in the world.  It liberalized trade, privatized the production of goods and services, adopted a flat-rate income tax and removed agricultural monopolies to achieve economic growth.[37]  Its experience highlights how increased economic growth can positively affect health: 

• In 1960, Hong Kong, then a British colony, had a GDP per capita of only $3,073.[38]
• Today, as an economically independent former colony, Hong Kong has a GDP per capita of $29,945 - which is higher than per capita GDP in Great Britain.
• Life expectancy in Hong Kong has risen to 82 years and its HIV/AIDS prevalence rate is only 0.1 percent.

      By contrast, life expectancy in several Sub-Saharan African counties is actually falling, while per capita GDP has stagnated.  For example, between 1960 and 2004, per capita GDP in Zimbabwe fell $200 and life expectancy fell from 42 to 38 years.  In less than 30 years, the rate of HIV infection in the adult population has risen to more than 20 percent![39] 

      Effects of Education on Health.  Primary education in particular is a strong determinant of health outcomes. [40]   Adriana Lleras-Muney, an economist at Princeton University, studied the effects of education on individuals in the U.S., for example, and found that one extra year of compulsory education increased life expectancy by as much as 1.7 years.[41]  In general, education enables individuals to plan for the future, enhances cognitive ability and increases understanding of health issues.  Despite this fact, 42 million school-age children in Sub-Saharan Africa are not even in school.[42]   

      Wealth and Health:  Debate over Cause and Effect.  Some believe there is no necessary connection between income growth and improved health.  Certainly per capita income can grow without a measurable increase in health, as was the case in Pakistan and Brazil.[43]  Conversely, health can improve without increased income - as happened in Jamaica and Sri Lanka.[44]  Average income is not the only determinant of health.  Determinants of a population's health may well overlap with determinants of economic growth; both may benefit, for example, from frugal and responsible governance or education. 

      Columbia University economist Jeffrey Sachs and other public health advocates maintain that low economic growth rates in Africa are due to the excess burden of disease.[45]  Indeed, Sachs argues that the way to improve the economic growth in poor countries is for wealthy countries to create a massive global fund to fight AIDS, tuberculosis and malaria.[46]  The World Health Organization's Commission on Macroeconomics and Health also argues that the poorest countries are poor because they are sick and expenditures on health are a precondition for economic growth.[47]  (See the Message to Debaters for a discussion on why Sach's plan will likely fail.) 

      However, other economists find little evidence to support the notion that a high disease rate necessarily restrains economic growth.  Countries that have a high degree of poverty can still adopt policies that will spur economic growth.[48]  Daron Acemoglu, an economist at the Massachusetts Institute of Technology, finds that disease burden does not explain most of the difference in economic growth rates between rich and poor countries.  Differences in growth can be better explained by the quality of political, legal and social institutions. Acemoglu and his colleagues acknowledge that disease can reduce an individuals' ability to work and produce income, but it's not the primary factor limiting growth.  They analyzed efforts to reduce disease and mortality for countries in Africa, Asia and Latin America between 1930 through 1960.  They found that as a result of disease intervention, the mortality gap in Latin America narrowed by nine years compared to the OECD average.  The mortality gap for parts of Asia narrowed 3.5 years. If health status had a significant impact on economic development, one would expect income to rise significantly in Latin America and Asia compared to growth in OECD countries.  Yet, despite this significant extension in longevity in Latin America and Asia, income did not rise at the same rate as the OECD. [49]      

      Without the improved economic opportunities that come from institutional reform, investments in health will return less in the way of economic benefits and will not necessarily be sustained over the long term.  Improve the institutions and economic growth will ensue. With economic growth, health status will improve in a way that is sustainable. For the economic explanation see NCPA President John Goodman's Message to Debaters.

      Why This Issue Is So Important. Aside from temporary, humanitarian relief, almost everyone in the foreign aid community believes that the purpose of aid is to raise living standards-which is to say, to spur economic growth.

      Message to Debaters. If foreign aid does not lead to economic growth, then (1) the gap between rich and poor countries will continue to grow; (2) the programs being funded by foreign aid will not be sustainable (once the donor stops giving, the program will die out and cease operating); and (3) the recipient country will become perpetually dependent on the donor country (i.e., poor countries will never be able to solve their own problems).  Also, Remember Clark's point: If you keep more people alive but do not expand the size of the economic pie, the average income per person must go down.

Why Are Poor Countries Poor?

      According to Paul Collier, the roughly 5 billion people in the world today can be divided into three groups.  About 1 billion are living in countries that can be called "rich."  Another 3 billion are living in countries that really are "developing."  The final group, which Collier calls the "bottom billion"are living in countries that are not developing at all.  In fact, their standard of living is not much better than it was four decades ago.

TABLE II

Taken From: Paul Collier, The Bottom Billion, (Oxford: Oxford University Press, 2007).

      As Table II shows, people living in the 58 countries that house the bottom billion have much worse health and economic outcomes than the people who live in countries that are "developing."  Further, 70 percent of the bottom billion are living in Africa and most of those are in Sub-Saharan Africa.  Why are some countries growing while others are not?

      The Poverty Trap.  As noted above, Jeffrey Sachs believes there is a poverty trap and that countries are unlikely to get out of their trap unless they receive massive amounts of foreign aid from the developed world. The problem with this explanation is that there are so many exceptions to it:[50]

• For example, Botswana was the fourth poorest country in the world in 1950 (out of 137);  but by 2001, it had increased its income by a factor of thirteen.
• Lesotho was the fifth-poorest in 1950, but increased its income by a factor of five over the next half century.
• Two other success stories are China and India - both among the poorest countries a half century ago.
• Furthermore, 11 of the 28 poorest countries in 1985 were not in the poorest fifth in 1950 - they are poor not because they were trapped in poverty, but because they fell into poverty from above.

      Commenting on the theory of the poverty trap, Easterly writes:[51] 

      While Western planners were discussing whether to increase foreign aid by $50 billion for all poor countries, the citizens of just two large poor countries - India and China - were generating an increase of income for themselves of $715 billion every year.  The gang of four - Hong Kong, Korea, Singapore, and Taiwan - went from third world to first over the last four decades ... without significant Western assistance ... and without the West telling them what to do.

      The Bad Government Trap.  If the poverty trap is not the cause, what is?  Easterly contends that the problem is bad government.  "Badly governed countries are poor countries,"[52] he writes and to back up his claim he has collected data ranking countries on the degree of corruption and the degree to which they have failed to adopt democratic institutions.  The countries that score the lowest by these measures have significantly lower economic growth rates.  In fact, after controlling for the effects of bad government, Easterly says the initial level of poverty has no statistically significant effect on subsequent growth.[53]

      Paul Collier uses a similar measure and calls countries that have both lower incomes and bad governance "failing states."  As Table III shows, almost three-fourths of the bottom billion live in countries that have at some time been failing states.[54] 

      Furthermore, once countries become a failing state, the probability of turnaround is very low.  In fact, Collier calculates that the probability that a failed state will begin a substantial turnaround in any given year is only 1.6 percent.  That implies that the expected length of time it will take to cease being a failed state is 59 years![55]

      The Conflict Trap.  Paul Collier agrees with Easterly in rejecting the idea of a poverty trap.  But in addition to bad government, there are three other traps that plague people who live in the poorest countries.  For example, almost three of every four of the bottom billion live in a country that is in a civil war or has recently had one.  Here the causation goes both ways.  Wars cause poverty; but the poorer a country is, the more likely it is to be in a war.  Furthermore, the experience of being in a civil war roughly doubles the risk of another conflict.  In fact, a post-conflict country has little better than a fifty-fifty chance of making it through the next decade without another war.[56]

      The Natural Resource Trap.[57]  You might suppose that having abundant natural resources - such as oil or diamonds - would be a good thing.  Yet it often is not.  In fact, development economists often write about the "curse" of depending on a significant natural resource.  (Botswana, with abundant supply of diamonds is an exception to the rule.)

      The reasoning goes like this:  In order for countries to buy goods on the world market, and import them, they must first produce and export (in order to get the foreign exchange to buy the imports).  In the process of producing for export, moreover, a country's businesses must compete with rivals in other countries all over the world.  It is precisely this competition that forces enterprises to be efficient and get increasingly better at what they do.

      This very natural process is subverted, however, when there is a resource that is a significant part of the economy.  Instead of producing for export and competing in the world economy to get foreign exchange, an oil-rich country can sell the oil to the world market instead.  A diamond-rich country can sell diamonds instead.

      To make matters worse, governments that have access to oil or diamond revenues do not have to tax their own citizens in order to fund public expenditures.  As a result, the citizens do not develop the normal resistance to wasteful spending and engage in normal scrutiny of government activities.  Ironically, the presence of democracy seems to make these outcomes even worse.

      (Note:  Some students may think this subject is a bit esoteric and wonder why we have given so much space to it.  The reason: foreign aid (including debt relief) has exactly the same economic consequences as discovering oil and diamond revenues.  See the discussion in Message to Debaters.)

      The Landlocked with Bad Neighbors Trap.   About 38 percent of the bottom billion live in countries that are landlocked and most of these are surrounded by bad neighbors.[58]  The problem here is that in order for a landlocked country to get its exports to the nearest seaport (or to get imports from the seaport) the country must use the roads, rails, and other transportation services of a neighbor.  If infrastructure of the neighbor is poor, the landlocked country will be set back.  Also the economic policies of countries have other spillover effects on their neighbors - for good or ill.

      The Malthusian Trap.  Finally, countries that are in the Malthusian Trap have large numbers of people who are condemned to live perpetually at a subsistence standard of living.  Anything that improves their condition will allow more children to survive to adulthood, thus increasing the population without increasing average consumption (or income).  

What Difference Has Foreign Aid Made?

      Over the past five decades, the developed countries of the world have given less developed countries $2.3 trillion in foreign aid.  In Sub-Saharan Africa alone the total amount of aid equals twice the annual income of every man, woman, and child in the region.[59]  As a result:

• Sub-Saharan Africa is linked to the global economy more through the flow of financial aid and loans than through the trade of goods or services.[60]
• For several countries, aid accounts for more than 20 percent of national income.[61]
• In Mozambique, an extreme case, economic assistance accounted for 60 percent of national income in 2002.[62]

      What difference has all this money made?  Amazingly, economists aren't sure.  In recent years, there have been a series of dueling studies - with some showing that aid causes small improvements and others showing that effects are zero or negative.[63]  However, the surprising thing is that the issue is debated at all.  How can you spend $2.3 trillion and not have any obvious beneficial effects?  That's going to be a problem for affirmative teams.

      Opportunities Missed.  In 2005, Gordon Brown, who is now Britain's Prime Minister, gave a speech calling for a doubling of foreign aid - a Marshall plan to help the world's poor.  He gave several examples of how easy it is to do good:[64]

• Medicine can prevent half of all malaria deaths at a cost of only 12 cents a dose.
• A bed net to prevent a child from getting malaria costs only $4.
• Preventing 5 million child deaths over the next 10 years would cost just $3 for each new mother.
• Giving cash to families to reward them for putting children in school would also cost little.

      Yet as William Easterly wrote in response, after spending $2.3 trillion over a fifty year period the West has still not managed to get 12 cent medicines to children to prevent half of all malaria deaths.  It has not managed to get $4 bed nets to families or to get $3 to each new mother to prevent 5 million child deaths.  Nor has it managed to get school-aged children in school.  To the contrary, most of the problems of the poorest countries seem as bad today as ever.  Indeed, after spending all that money:[65] 

• Almost 3 billion people live on less than $2 a day.
• 840 million people don't have enough to eat.
• 10 million children die every year from preventable diseases.
• AIDS is killing 3 million people a year and is still spreading.
• One billion people in the world lack access to clean water.
• Two billion lack access to sanitation.
• One billion adults are illiterate.
• Almost one-fourth of the children in poor countries do not finish primary school.

      These failures do not arise from the lack of desire or a lack of effort on the part of donor countries.  In Chad, the Ministry of Finance tracked money it released for rural health clinics to see how much of it actually reached the intended destinations.  Amazingly, less that 1 percent of the funds actually reached the clinics![66]  In Tanzania, foreign aid donors spent $2 billion over the past 20 years building roads.  Yet the road network today is no better than it was two decades ago.[67]

      The challenge for affirmative teams will be to show why their plan will work better than the previous plans that did not succeed.

      Foreign Aid and Economic Growth.  The objective of most foreign aid is not simply to relieve distress, but to help the recipient countries be less poor - that is to promote economic growth.  But as noted, the evidence of any growth effect is very weak.  Countries that are below average recipients' of foreign aid, for example, grow at the same rate as countries that are above average.[68]

      In order to encourage growth, donor countries have focused on infrastructure (roads, ports, etc.) investments.  Yet these dollars are apparently substituting for local dollars (see Message to Debaters).  Overall, aid does not appear to increase the total amount of output per person.  An example of failure is $5 billion spent on a publicly-owned Ajaokuta steel mill in Nigeria.  Although the project began in 1979, the plant has yet to produce a single bar of steel.[69]

      As noted, the most remarkable success stories are countries that have received little foreign aid. Hong Kong and Singapore are two former British colonies that went from third world to first world status with initially no foreign aid. Today, average income in these two countries is higher than it is in Britain. [70] Chile has been by the far the most successful Latin American country with very little help from the World Bank or the IMF.[71] The two most successful countries in the last two decades are probably China and India. Yet, over the period:

•  World Bank aid to China equaled about one-tenth of a cent per Chinese person per day.[72]
•  World Bank aid to India amounted to about a half a penny per Indian per day. [73]

      Botswana, again, seems to be the exception to all rules. Even though it has one of the highest AIDS infection rates in the world, with more than one in every three adults HIV positive, it has posted the world's fastest growth rates over the past four decades. It did this despite the curse of natural resources (diamonds) and the curse of aid. In the 1960s and 1970s aid averaged about 16 percent of Botswana's national income and the country still managed to grow 10 percent every year. [74]

Foreign Aid:  Is the Cure Worse than the Disease?

            Faced with Sub-Saharan Africa's grim reality, politicians and celebrities from Barbara Bush to Bono have campaigned to increase development aid to Africa.[75]  For example:

• In 2005, the leaders of the G8 nations, a group of the world's leading developed economies, agreed to double their annual aid to Africa by 2010.[76]
• President Bush recently requested $30 billion over the next five years to fight HIV/AIDS, nearly doubling U.S. aid to Africa.[77]

      Yet is it possible that increased aid could do more harm than good?  There are a number of reasons to think that it might.  It is easy to find cases where countries have done worse after receiving aid.  For example, Liberia received over $3 billion in development aid between 1980 and 2004, but its GDP per capita actually decreased from $744 to $130 over the same period of time![78]  Indeed, for Africa as a whole it appears that the more foreign aid that is given, the worse conditions seem to get.  The question is: Did aid make Africa worse off or would conditions there have been even worse without the aid?

      Economic Studies.  A number of studies have tried to sort out the answers to this question: 

• Economist Vu Minh Duc examined how foreign aid affected the economic growth of developing countries over the period from 1975 to 2000 and found that foreign aid had a negative effect on GDP per capita growth.[79]
• Deborah A. Brautingham, professor at American University, and Stephen Knack, a World Bank economist, also found a negative relationship between high aid levels and poor governance in Africa, even after accounting for the tendency of donors to give more aid to African countries that are instituting reforms. They found that African governments receiving the most aid are not transparent or accountable, poorly enforce the rule of law, and have bureaucracies that are ineffective and unresponsive.[80]
• International Monetary Fund chief economist Raghuram G. Rajan and Arvind Subramian also found that aid does not lead to higher rates of economic growth - but instead appears to undermine the conditions necessary for growth.[81]

      As noted above, a series of studies have produced seesaw results - with one study favorable to the effects of aid on growth followed by another study rebutting it, etc.  These results are summarized in Easterly's book.  On balance, one would have to say that the pro-aid advocates at this point face a very difficult burden of proof. 

Figure II

           International Agencies.  Established as part of the United Nations after World War II, the World Bank's original purpose was to encourage development in post-war reconstruction.  Now the Bank exists largely to distribute foreign aid to developing countries.[82] 

        After over $2.3 trillion and 40 years of assistance from the World Bank,[83] Sub-Saharan Africa remains one of the most diseased and impoverished regions of the world.  George Ayittey, an economist at American University, argues that the World Bank has wasted billions of dollars in failed programs in Sub-Saharan Africa:[84]  For example,

• In the 1960s and 1970s, the World Bank invested in more than 2,200 infrastructure projects such as roads, dams, and telecommunications, but nearly all were seriously undermined by poor Bank supervision, lack of domestic maintenance or neglect. 
• According to the Bank's own evaluation, half of its development projects in Africa failed.  
• The Bank's agricultural projects have also done more harm than good.  After 15 years and $2.4 billion to boost food production in Africa, food production has fallen by almost 20 percent.[85]  According to the Bank's own estimates, 75 percent of its agricultural projects were failures.[86] 

       "Structural adjustment" loans by the World Bank and the International Monetary Fund (IMF) are essentially loans that are conditional on the recipient country's making structural changes in its governance, including free market reforms.  How well have these loans worked? 

• Between 1981 and 1991, the World Bank loaned $25 billion to achieve structural adjustment reforms in 29 African countries.  The object was to reduce spending on things like health, education, and development and make debt repayment a priority.[87] 
• William Easterly researched the effects of adjustment lending on the reduction of poverty in recipient countries and found that Word Bank and IMF loans have actually increased the number of poor by 14 million.[88]

         Table III shows the African countries that are among the top twenty countries in the world in terms of the number of World Bank and IMF structural adjustment loans.  As the table shows, most of these countries have zero or negative economic growth.  The reality is even worse.  "It's a little unnerving that almost all recent cases of collapse into anarchy were preceded by heavy World Bank and IMF involvement," Easterly comments.[89] 

TABLE III

African Countries That Were in the World's Top Twenty of Structural Adjustment Loans REceived 1980-1999

         One reason why structural adjustment (sometimes called "shock therapy") loans do not work is that nothing bad usually happens if the recipient government fails to live up to its promises.  As Collier explains:[90] 

     The government of Kenya promised the same reform to the World Bank in return for aid five times over a fifteen-year period.  Yes, five times it took the money and either did nothing or made token reforms that it then reversed. 

      Non-Profit Organizations (NGOs).  The original charters of the World Bank and the IMF required these agencies to work through the governments of the recipient countries.[91]  So if the country has a bad government, the giving or lending agency has to deal with the bad government.  Even though it's hard to imagine a major aid program operating completely outside these countries' governments, a number of experts advocate nongovernment aid programs.  How well are they likely to work? 

      In his book, The Road to Hell, Michael Maren says NGOs and charities are self-serving systems that sacrifice the people they claim to help in order to survive and grow.  Maren argues that charities design programs based on their own idealized images of famine rather than the reality in Africa.  Aid workers live luxurious lifestyles in the midst of poverty and make little attempt to learn about or to integrate themselves into their host society.  For example, Maren notes that in Somalia, aid organizations push programs that are not effective because building these programs will ensure they receive more money from donors.  They also report a larger number of refugees than actually live in the country because they depend on a large number of starving individuals for their funding.[92]

      Moreover, aid administrators are also often corrupt.  For example, Maren criticizes Save the Children, an NGO founded to give poor children educational opportunities, health care and disaster relief, for exploiting starving children to raise funds which are spent mostly on administering grants from the U.S. government.  He notes that Save the Children spends less than 50 percent of its sponsors' dollars on field programs to help children.  Instead, the organization spends millions to pay high salaries and rent weekend beach houses for its directors.[93]

      In addition, the U.S. NGO AmeriCares reportedly sends thousands of donations whose primary purpose seems to be to provide an outlet for corporations looking for tax write-offs rather than meeting real needs in Sub-Saharan Africa.  According to the General Accounting Office (GAO), AmeriCares sent two million Mars bars, seventeen tons of Pop Tarts and stocks of Prozac to the poor in developing countries when in reality they needed nutritious food, vaccines, and other emergency drugs.[94]

      Aid Dependence.  Foreign aid can lead to significant institutional destruction by undermining internal reforms.  If a country receives a steady income from the outside, there is little incentive to improve within.[95]  Aid may act as a safety net, making it less risky to overspend and run up debt.  Government officials have less incentive to institute macro-economic reforms and create self-sustaining health programs when expenditures bear little relationship to revenues. 

      For example, in Mozambique large amounts of donor assistance have produced a high level of aid dependence.  The government gets just under half of its money from taxes (49 percent in 2003) and aid accounts for 30 percent of its national income.  This is twice as high as the average for Sub-Saharan Africa (about 15 percent).  Such high levels of aid have reduced the government's incentive to use its resources efficiently and in the public's interests, as large amounts of aid displace the need for tax collection.[96]

      Corruption.  Aid is also ineffective because of the appalling way in which much of Africa is governed.  Transparency International consistently ranks Sub-Saharan African countries among the governments with the highest levels of corruption in the world.[97]  When countries lack the transparency and accountability necessary to ensure that donations are used to help citizens, foreign aid often fails to reach its intended recipients.[98] Corruption is widespread throughout Sub-Saharan Africa:

• A 2006 World Bank Report estimates that about half of all funds donated for health efforts in Sub-Saharan Africa never reach the people the aid is intended to help. According to the Bank, the money is spent in the form of payments to ghost employees and padded prices for transport and warehousing.[99]
• For example, in Ghana, where corruption is particularly rampant, 80 percent of donor funds are diverted from their intended purpose, often ending up in bank accounts in the West![100]
• The African Union estimates that corruption cost the region $148 billion in 2005.[101]

      In 2003, Uganda received a multi-million dollar grant from the Global Fund to fight HIV/AIDS.  Three years later, a government inquiry revealed that tens of millions of dollars were stolen by corrupt officials and spent on personal phone bills, lavish Christmas presents, and expensive vehicles.[102] 

      Case Study: Haiti.  Uganda is not an isolated example of poor giving decisions.  Indeed, the one country in the world that has received the most standby (short-term crisis) loans from the IMF is Haiti,  and 22 of its 24 loans came under the rule of Papa Doc and Baby Doc Duvalier.  As Easterly writes:[103] 

      The income of the average Haitian was lower at the end of the Duvalier era than at the beginning.  Half of all children did not go to elementary school when Papa Doc came to power; half of all school children were still out of school when Baby Doc left power...

      After almost two hundred coups, revolutions, insurrections and civil wars since independence, Haiti today still has one of the world's most undemocratic, corrupt, violent and unstable governments. 

      Other Gifts and Loans.  Although Haiti is an extreme case, the overall pattern is disturbing.  A study by Alberto Alesina of Harvard and Beatrice Weder of the University of Mainz found that:[104]

• There is no relationship between the amount of aid a country receives and its ranking in terms of corruption.
• Nor is there any relationship between the amount of aid and how democratic a country is.

      According to Easterly:[105]

• The world's 25 most undemocratic rulers (out of 199 countries the World Bank rated on democracy) got $9 billion in foreign aid in 2002.
• The world's 25 most corrupt countries got $9 billion in foreign aid in 2002.
• The top 15 recipients of foreign aid in 2002, who got more than $1 billion each, got a median ranking in the worst fourth of all governments in the world.

      Does Aid Make Things Worse?  At least two studies have concluded that aid leads to more corruption and less democracy: 

• World Bank economist Stephen Knack finds that higher aid worsens bureaucratic quality and leads to more violations of the law and more corruption.[106]
• Simeon Djankov (World Bank), Jose Montalvo (Pompeu Faba University in Barcelona) and Marta Reynal-Querol (World Bank) also find that more aid causes less democracy; in fact the negative effect of aid on democracy (aid curse) is worse than the effect of oil (oil curse).[107]

      Corruption has detrimental effects on economic development because it robs the country of vast sums of foreign exchange needed for investment.  Also, in many Sub-Saharan African countries ruled by corrupt dictators, it is easy for corruption to get out of control because the country lacks sufficient checks and balances to deal with the problem.  In addition, corruption is also harmful because a corrupt government loses its legitimacy and its citizens' respect.[108]

      Misplaced Priorities.  Another way in which aid can make things worse is in the field of public health.  As it turns out, money spent on the wrong priorities can end up costing more lives than are saved. 

      Bill Clinton, Nelson Mandela, Barbara Bush, Bono and Ashley Judd are just a few of the politicians and celebrities who are part of the campaign to do something about AIDS in Africa.  The World Bank advertises that it is the "world's largest funder of AIDS programs."  Ironically, the same claim is made by the World Health Organization (WHO) and the US Agency for International Development (USAID).[109] 

      It is too bad that these celebrities and institutions did not get involved 25 years ago when virtually all the experts were predicting the AIDS would kill millions of Africans.  But now that 29 million Africans are HIV positive, what is the best use of scarce health care dollars? 

      It turns out that most of the hoopla in the West and most of the actual AIDS dollars are focused on AIDS treatment, whereas there is a much better return to be had on AIDS prevention and on the treatment and prevention of other diseases.  Further, in the very act of spending billions of dollars of foreign aid on AIDS treatment, health resources will be drawn away from AIDS prevention and other health needs.  In this way, spending on AIDS can actually cost more lives than it saves.[110]  (See John Goodman's Message to Debaters.) For example:[111] 

• The WHO estimates the cost of treating a patient with AIDS with the "triple drug cocktail" known as highly active antiretroviral therapy (HAART) is about $1,500 per patient per year; and this treatment adds only 3 to 5 years to each patient's life.[112]
• By contrast, a study in the British medical journal, The Lancet, estimates that prevention interventions such as condom distribution, blocking mother-to-child transmission, and voluntary counseling and testing could cost as little as $1 to $20 per year of life saved.
• The medicines that cure TB cost about $10 per case.
• A package of interventions designed to prevent maternal and infant deaths costs less than $3 per person.
• Worldwide, 3 million children die every year because they do not get vaccines that cost pennies per dose.
• One in four people worldwide suffers from intestinal worms, although treatment cost less than $1 per year.
• And a full course treatment for a child suffering from drug-resistant malaria costs only about $1.

      Note that AIDS treatment competes against every other health care need.  In fact two and one-half times as many Africans die from other preventable diseases as die from AIDS, including measles, respiratory infections, malaria, tuberculoses, diarrhea and others.  Worldwide, there were 15.6 million deaths from these causes as opposed to 2.8 million from AIDS.[113] 

      Overall, a study by Harvard economist Michael Kremer estimates that for every year of life gained by giving antiretroviral therapy to an AIDS patient, 25 to 110 (quality adjusted) years of life could be saved by spending those same dollars in more productive ways.[114] 

      Note that even AIDS prevention is not always cost effective.  An article in The Lancet lamented that 5.5 million child deaths could have been prevented but for the "levels of attention and effort directed at preventing the small portion of child deaths due to AIDS."[115] 

      Market Distortion.  Aid can also hinder economic growth by undermining local markets.  Donated goods often cause the local industries that normally provide them to collapse:[116] 

• Donated drugs in Somalia caused several pharmacies to close because their customers received the drugs free of charge from donors.
• Donations of food have contributed to the failure of the agricultural industry in many Sub-Saharan African countries.

      In addition, charities often spend a large portion of their money on high salaries, expensive vehicles, and nice houses for their employees.[117]  The salaries of employees of foreign aid groups are often substantially higher than those in the local community.  They can outbid natives to purchase some necessities, driving up prices and making it more difficult for people in the region to purchase food and clothing.[118] 

      Despite billions of dollars of aid and supplies, Sub-Saharan Africa's health remains poor.  Africa's problems are unlikely to be solved by piling on more aid.  Too often it exacerbates the problem.  Other times it is simply ineffective. 

Can Foreign Aid be Made to Work?

      Granted that foreign aid has not worked well in the past.  Can it be made to work better, especially in the field of public health? 

      Jeffrey Sach's Top Down Approach.  As noted, Sachs believes that what poor countries mainly lack is money, and that money from the West is all that is needed to propel them out of a poverty trap.  In his own words:[119] 

      When people are... utterly destitute, they need their entire income, or more, just to survive.  There is no margin of income above survival that can be invested for the future.  This is the main reason why the poorest of the poor are most prone to becoming trapped with low or negative economic growth rates.  They are too poor to save for the future and thereby accumulate the capital that could pull them out of their current misery.

      Yet without any help from Western aid agencies, Africans who "are too poor to save for the future" appear quite resourceful at obtaining items they really want - including radios, television sets, cell phones and even computers.  For example, between 1998 and 2002, the number of cell phones in Africa soared ten fold.  Cell phones, by the way, are not just consumer pleasures.  They are capital investments that help farmers, fishers and entrepreneurs check on prices, place orders, transfer funds, track customers, etc.  Additionally, the number of Internet users has grown from one in every 27,000 people in 1996 to one for every 138 people in 2003.[120] 

      William's Easterly's Bottom Up Approach.  According to Easterly, foreign aid has failed for two principle reasons: (1) it is top down (with planners trying to impose simple-minded plans on countries and cultures they do not understand; and (2) there is no systematic feedback or accountability (when things go wrong, no one is at fault). 

      In contrast to a top down approach, Easterly argues that almost all successful aid programs are bottom up.  There is no plan that can be written down on paper and followed - as envisioned by Sachs and this year's debate topic - that will work: 

      No recipe exists, only a confusing welter of bottom-up social institutions and norms...  These evolve slowly on their own from the actions of many agents; the Western outsiders and planners don't have a clue how to create these norms and institutions.[121] 

      Changes should be tried in a gradual, piecemeal experimental way, and the answers will be different in different countries and different sectors.[122] 

      Are there any principles we can rely on?  Easterly suggests a few. 

      Don't Give People What They Do Not Want.  Aid programs will not work, and certainly will not be sustainable if they reflect Western values rather than the values of the people we are trying to help.  Example: Population Services International (PSI) sells insecticide-treated bed nets for 50¢ each to poor Malawa mothers through countryside antenatal clinics.  This means it gets nets to people who value and need them.  In fact, use of these nets is nearly universal by those who get them.  By contrast, when free nets were handed out to people in Zambia, 40 percent of the recipients didn't use them.[123] 

      Create Economic Incentives for Success.  In the example above, PS1 gives the nurses who dispense the nets 9 cents per net.  As a result, nets are always in stock because it's in the financial self interest of the distributors.  PSI also sells nets to richer Malawians for $5 a net, using the profits to subsidize nets sold at clinics.  In this way, the program pays for itself.  In four years, the number of children under age five sleeping under nets increased from 8 percent to 55 percent, with a similar increase for pregnant women.[124] 

      Another example of the use of incentives is PROGRESSA, a program developed by the Mexican economist Santiago Levy to provide cash grants to mothers if they keep their children in school, participate in health education programs and bring their kids to health clinics for nutritional supplements and regular checkups.  By 2000, 10 percent of Mexican families were participating.[125] 

      Create Measurement and Feedback Mechanisms.  The Dutch aid organization International Children Support Fund (ICS) distributed deworming drugs to school children in the southern Busia district of Kenya, where 92 percent of the children were infected with worms.  They also conducted worm prevention education programs.  Through careful study they learned that deworming drugs keep kids in school (absenteeism was down by one quarter) but deworming education had no effect.  This feedback allowed ICS to redirect its resources from activities that don't work to those that do.[126] 

      Another example of research-driven aid is in Western Kenya.  Researchers found that attendance at preschool programs was 25 percent higher and test scores were higher when a free breakfast was supplied.  Another project determined that textbooks raised test scores for the top 40 percent of students, but not the bottom 60 percent.  Flip charts appeared to make no difference.  This feedback, again, allows aid to become more focused and effective.[127] 

      As Easterly writes:

      Some equally plausible interventions work and others don't.  Aid agencies must be constantly experimenting and searching for interventions that work.[128] 

      Focus on Small Interventions with High Payoffs.  Among the cost effective uses of aid are deworming drugs, dietary supplements such as those for iron, Vitamin A and Iodine; sex education, indoor spraying to control malaria, fertilizer subsidies, vaccination, and urban water provision.[129] 

      Avoid Governments.  Where possible, avoid giving money to or working with corrupt governments, or governments that are likely to be corrupted once they get their hands on foreign aid money.  Mohammad Yunus of Bangladesh won a Nobel Prize for his private-sector efforts at establishing micro lending.  His health centers are described below. 

      Collier's Third Way.  As noted, Paul Collier believes aid will not be effective unless it comes to grip with the four traps.  To help African countries get on track, he thinks developed countries should raise tariffs on goods from Asia and lower them on African imports - thereby giving a leg up to poor African countries who have fallen way behind their Asian counterparts.  He also calls on Western governments to require banks to disclose suspicious deposits by African plutocrats and form international agreements on the use of natural resources.  Like Easterly, Collier endorses the idea of alternative systems that are independent of the recipient government- at least in those countries where basic public services, such as primary education and health clinics are utterly failing. He calls them "independent service authorities," and envisions that government, donors and nonprofit organizations would channel money through them. [130]

      He also believes Western governments should pressure African countries to sign a charter governing the use of natural resources. Under the terms, the African country would allow an international accounting firm, such as Price Waterhouse to audit the revenues involved and the funds involved in the extraction and sale of diamonds, oil and other natural resources. A model is the one being followed by De Beers for the certification of diamonds. [131]

      By far the most novel of Collier's idea is a sort of gunboat diplomacy - using Western military might to squash rebellion, genocide and civil wars and protect good governments from insurrections.  For example:[132] 

• The average civil war in Africa costs $64 billion, but could be suppressed in its early stages for a fraction of that amount.
• The British intervention in Sierra Leon, for example, easily ended a savage war-producing benefits worth 30 times the cost.
• According to Columbia University public health expert Josh Ruxin, a modest Western force could have stopped the 1994 genocide in Rwanda and prevented 5 million additional deaths when civil war was extended into the Congo.
• A good start today would be to send an international force to stop the ongoing genocide in Darfur and prop up the governments of Chad and the Central African Republic-rather than allowing Africa to tumble into all out war.

Alternative Strategies for Africa

      The African continent was dubbed "the worst economic disaster of the 20th century" by economists Elsa Artadi and Xavier Sala-i-Martin in a paper published by the National Bureau of Economic Research.[133]While the rest of the world's economy grew at an annual rate of close to 2 percent from 1960 to 2002, Africa's economy was actually shrinking:

• From 1974 through the mid-1990s, economic growth in Africa was negative, reaching a low point of -1.5 percent in 1990-1994. 
• Today, per capita GDP for Sub-Saharan Africa is fully $200 less than it was in 1974 (after adjusting for inflation), a decline of 11 percent over the last quarter-century.  

      Economic growth in Africa must improve significantly for standards of living in the region to rise to acceptable levels.  The key policy question for these countries and their development partners is how to spur economic growth.  The answer is the implementation of sound public policies.  (For the economic reasons for differences in growth rats, see the Message to Debaters).

      Promoting Economic Freedom.  The stagnation of African countries is a direct consequence of the public policy choices made by their governments.  Economic stagnation is a result of decades of political corruption, government-controlled monopolies, high inflation, restrictive and unproductive regulation of businesses, and bans on imports and exports. 

      The Fraser Institute in Canada publishes an annual "Economic Freedom of the World" report, which examines four key components of economic freedom: (1) property rights and the rule of law, (2) levels of taxation and spending, (3) regulations on workers and businesses and (4) monetary policy (inflation).[134] 

• Nations in the top quartile of the economic freedom index have an average per capita GDP of $24,402, compared to $2,998 for those nations in the bottom quartile.
• The top quartile has an average per-capita economic growth rate of 2.1 percent, compared to -0.2 percent for the bottom quartile.
• Unemployment in the top quartile averages 5.9 percent, compared to 12.7 percent in the bottom quartile.
• Life expectancy is 77.8 years in the top quartile compared to 55.0 years in the bottom quartile.
• Among nations in the top quartile, the average income of the poorest tenth of the population is $6,519, compared to $826 for those in the bottom quartile.

      Contrast two countries that pursued free trade and economic liberalization (Hong Kong and Singapore) with two African countries that did not (Guinea-Bissau and Zimbabwe):[135]

• Hong Kong is the most economically free country, followed by Singapore at number two; Zimbabwe is the least free, while Guinea-Bissau is sixth from the bottom.
• Hong Kong has per capita GDP of $36,500 and a 5.9 percent growth rate; Singapore clocks in at a competitive $30,900 and 7.4 percent growth in 2005.
• By contrast, Zimbabwe has a per capita GDP of only $200 and a negative growth rate of -4.4 percent; Guinea-Bissau does little better with a $900 per capita GDP and 2.9 percent growth.

      African nations would benefit by adopting policies that free their economies and promote growth.  Sadly, they are among the least free in the world.  There is not one Sub Saharan African country in the top quartile.

      Some, however, argue that while economic freedom should be pursued, it should be pursued with caution.  Joseph Stiglitz, Nobel Prize winner and professor of economics at Columbia University notes that because of the way it is implemented and managed, liberalization is often harmful to developing countries.[136]  For example, he argues that trade liberalization may not live up to its promises if it destroys jobs in developing countries.  As inefficient industries close down from the pressure of international competition, developing countries lack capital and entrepreneurship to create new firms and new jobs.  He argues that developing countries should drop protective barriers carefully and systematically, phasing them out only when new jobs are created. 

      Stiglitz also maintains that transitioning too quickly from public to private control is problematic.  In developing countries, this can often cause a shortage of services.  The assumption that markets arise quickly to meet every need, Stiglitz argues, is false.  In some cases, government activities arise because markets have failed to provide essential services. 

      Promoting Foreign Investment and Capital Accumulation.  Investment is essential to economic growth, and poor and developing countries need foreign capital.  Investment as a percent of national income in Africa is not only low, it has declined over the last 40 years.  While investment rates in Africa have remained below 15 percent of GDP, the rate has been 20 percent to 25 percent in the average-performing developed country and 30 percent for the East Asian "tigers" (Hong Kong, Singapore, South Korea and Taiwan).[137]

      To attract foreign investment, African governments and businesses must pay a high risk premium - a high interest rate or rate of return.  This is to compensate investors for the extra risks they take due to political instability, price volatility and extreme government policy reversals.  If the investment risk premium had instead been at the same negligible levels as OECD countries, Africa would have grown 0.44 percent faster every year because investors would not need extra incentives to invest.[138]  This means that in only 30 years, Africa's GDP would be 13.2 percent higher!

      Private investment has a strong effect on growth because it is more efficient than government investment.  Two of the most crucial conditions for investment are property rights and the rule of law.  If the government fails to protect property or enforce contracts, investing can be perceived as too risky.  In this way, the rule of law impacts economic growth even more than geography or international trade.[139]  MIT economist Daron Acemoglu studied this problem and found that good institutions lead to sustained growth in previously poor areas while corrupt institutions cause stagnation.[140]  Improve the institutions and economic growth will ensue.  Acemoglu finds, for example, that importing Chilean institutions into Nigeria would raise GDP by a factor of seven.  (For more on the importance of institutions see the Message to Debaters.)

      Promoting Intellectual Property Rights.  Drug manufacturers rely on government patents to protect their investments in researching and developing new drugs.  It takes 10 to15 years and costs an average of $800 million to bring a new medicine to market. [141]  When this investment is not protected, others can quickly copy the drug and offer it at a reduced price without incurring substantial costs to develop the drug. 

      Because developing countries are lax in protecting intellectual property rights, drug manufacturers have weak incentives to develop drugs for illnesses affecting people in these countries.  William Maloney of the World Bank found a positive relationship between the number of patents granted and the amount of money spent on research and development in 49 countries.[142]   OECD countries, on the average, had 1,975 patents between 1975 and 2005 while developing countries had only 34!  Correspondingly, OECD countries contributed a larger percent of their GDP toward research and development than developing countries.    In order to improve the availability of drugs in Sub-Saharan Africa, these countries should improve the protection of intellectual property rights. 

Sidebar: Combating AIDS in South Africa

South Africa is currently experiencing one of the most severe AIDS epidemics in the world.  By the end of 2005, there were five and a half million people living with HIV in South Africa, and almost 1,000 AIDS deaths occurring every day.[1]  South Africa's AIDS epidemic not only affects individuals and their communities, it impacts the country's overall social and economic progress:

• Average life expectancy in South Africa is now 54 years - without AIDS, it is estimated that it would be 64.[2]
• Research shows that HIV-positive patients will soon account for 60-70 percent of medical expenditures in South African hospitals.[3]

HIV is widespread, but with antiretroviral drug treatment, HIV-positive people can maintain their health and lead a relatively normal life for many years.  However, few people in South Africa have access to this treatment, and a number of factors have been blamed.  Many claim that the government response has exacerbated the problem. 

Since 2000, the South African government has accused manufacturers of HIV/AIDS drugs of price gouging.  In truth, South Africa already pays some of the lowest prices found anywhere in the world.  And within South Africa, public sector drug prices are a fraction of those the private sector pays.  For example, developed countries pay an average of $10.12 for AZT while South Africa pays only $2.16.  Moreover, in many ways the nation's government is worsening the crisis by threatening price controls and supporting a pharmacy "cartel" that keeps retail dug prices far above competitive levels.  The lack of competition in the retail market pushes prices up by 55 percent for some drugs!  Government policies toward drug manufactures also make it more difficult for South Africans to receive ARV treatment:[4]

• A 1997 act required the substitution of generic drugs for brand-name drugs (unless overridden by the doctor or patient) and authorized the Minister of Health to allow parallel imports by third parties of cheaper generic equivalents of patent-protected medicines. This violates patents and discourages drug research companies from investing in South Africa.
• To control drug costs, the South African government has imposed a fixed-price on drugs. Unfortunately, such laws keep prices for consumers high because drug companies cannot negotiate discounts on prescription medicines with retailers.

These actions raise the question of whether the government really wants to treat AIDS.  Over the past several years, the trend in the public sector has been to expand primary care and cut back on expensive, curative medicine.  AIDS is apparently no exception.  At present, government hostility in South Africa toward drug research companies is driving away the very resources needed to battle the HIV/AIDS epidemic.

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[1] UNAIDS/WHO, "UNAIDS 2006 Report on the global AIDS epidemic," Annex 2: HIV/AIDS estimates and data, 2006. 

[2] "The Demographic Impact of HIV/AIDS in South Africa - National and Provincial Indicators for 2006," Centre for Actuarial Research, South African Medical Research Council and Actuarial Society of South Africa, November 2006. 

[3] Inter Press Service News Agency, "Health South Africa: a burden that will only become heavier," May, 2006.

[4] Duncan Reekie, "South Africa's Battle with AIDS and Drug Prices," NCPA Brief Analysis, No. 3