Allow least developed countries to develop

Anis Chowdhury and Jomo Kwame Sundaram

SYDNEY and KUALA LUMPUR. The pandemic is pushing back the world’s poorest countries with the least means to finance economic recovery and contagion containment efforts. Without international solidarity, economic gaps will grow again as COVID-19 threatens humanity for years to come.

Least developed

While bringing some concessions, the ‘least developed countries’ (LDCs) designation – introduced five decades ago – has not generated changes needed to accelerate sustainable development for all.

The United Nations (UN) General Assembly created the LDCs category for its Second Development Decade (1971-80). Its resolution sought support for its 25 poorest Member States, with Sikkim out after India’s 1975 annexation.

With many others joining, the LDCs list rose to 49 in 2001. Half a century later, with only seven having ‘graduated’ – after meeting income, ‘human assets’ and economic & environmental vulnerability criteria – the 44 remaining LDCs have 14% of the world’s people.

With more than two-thirds in Sub-Saharan Africa, LDCs have over half the world’s extreme poor, surviving on under US$1.9 daily. LDCs are 27% more vulnerable than other developing countries, where 12% are extreme poor.

LDC criteria differ from World Bank low-income country benchmarks for concessional loan eligibility. Some LDCs – especially the resource-rich – are middle-income countries (MICs) disqualified from graduation by other criteria.

Most LDCs have become greatly aid reliant. Despite grandiloquent pronouncements, only 6 of 29 Organization for Economic Cooperation and Development (OECD) ‘development partners’ have kept promises to give at least 0.15% of their national incomes as aid to LDCs.

Chasing mirages?

The UN has organised conferences every decade since to review progress and action programmes for LDC governments and development partners. The first – in Paris – was in 1981, while the fifth will be in Doha in January 2022.

The 2011 Istanbul conference ambitiously sought to graduate at least half the LDCs by 2020. But only three – Samoa (2014), Equatorial Guinea (2017) and Vanuatu (2020) – have done so. Worse, most ex-LDCs have had difficulties sustaining development after graduating.

During the 1980s and 1990s, many developing countries implemented macroeconomic stabilisation and structural adjustment policies from the Washington-based International Monetary Fund (IMF) and World Bank.

These imposed liberalisation, privatisation and austerity across the board, including many LDCs. Unsurprisingly, ‘lost decades’ followed for most of Africa and Latin America.

Midas curse

Botswana, the first graduate in 1994, is now an upper MIC. Its diamond boom enabled 13.5% average annual growth during 1968-90. Unsurprisingly, Botswana’s ‘good governance’, institutions and ‘prudent’ macroeconomic policies were hailed as parts of this “African success story”.

However, the accolades do not sit well. Mineral-rich Botswana remains vulnerable. Right after graduation, average growth fell sharply to 4.7% during 1995-2005, and has never exceeded 4.5% since 2008.

Manufacturing’s share of GDP fell to 5.2% in 2019, after rising from 5.6% in 2000 to 6.4% in 2010. Nearly 60% of its people have less than the Bank’s MIC poverty line of US$5.50 daily.

Botswana remains highly unequal. During 1986-2002, life expectancy fell 11 years, mainly due to HIV/AIDS. When the government embraced austerity, its already weak health system suffered a disastrous brain drain.

Policy independence crucial

Although they have not yet graduated, several LDCs have successfully begun diversifying their economies. Their policy initiatives offer important lessons for others.

Neither Bangladesh and Ethiopia would qualify as a ‘good governance’ model by criteria once so beloved by the Bank and OECD. Instead, they have successfully intervened to address critical development bottlenecks.

Once considered a ‘basket case’, Bangladesh is now a lower MIC. Diversifying deliberately, rather than pursuing Washington’s policies, it has become quite resilient, averaging 6% growth for over a decade, despite the 2008-09 global financial crisis and current pandemic.

Bangladesh saw the potential for exporting manpower to earn valuable foreign exchange and work experience. In 1976, it agreed to provide labour for Saudi Arabia’s oil-financed boom.

Similarly, as newly industrialised economies no longer qualified for privileged Multi-Fibre Arrangement market access, Dhaka worked with Seoul from 1978 to take over South Korean garment exports.

Bangladesh is also the only LDC to have taken advantage of the 1982 World Health Organization’s essential drugs policy. Its National Drug Policy blocks imports and sales of non-essential drugs. Thus, its now vibrant generic pharmaceutical industry has emerged.

Allow pragmatism

During 2004-19, Ethiopia’s growth averaged over 9%. Poverty declined from 46% in 1995 to 24% in 2016 as industry’s share of output rose from 9.4% in 2010 to 24.8% in 2019.

Avoiding ‘Washington Consensus’ policies, Ethiopian industrial policy drove structural change. Manufacturing grew by 10% yearly during 2005-10, and by 18% during 2015-17.

With improved governance, state-owned enterprises still dominate banks, utilities, airlines, chemical, sugar and other strategic industries. Ethiopia opened banks to domestic investors, keeping foreign ones out. Meanwhile, privatisation has been limited and gradual.

Instead of full exchange rate liberalisation, it adopted a ‘managed float’ system. While market prices were liberalised, critical prices – e.g., for petroleum products and fertilisers – have remained regulated.

Neither Bangladesh nor Ethiopia have embraced central bank independence or formal ‘inflation targeting frameworks’, once demanded by the IMF and others, ostensibly for macroeconomic stability and growth.

Both countries retain reformed specialised development banks to direct credit to policy priorities, while Bangladesh’s central bank has “remained proactive in its mandated developmental role”.

Policy is destiny

In development and structural transformation, ‘path dependency’ implies policy is destiny. LDCs’ current predicaments are largely due to policies from decades ago, pushed by international organisations and development partners.

Reform agendas now should avoid ambitious comprehensive efforts which will overwhelm LDCs with modest resources and capabilities. Also, there is no ‘magic bullet’ or ‘one-size-fits-all’ policy package for all LDCs.

Policies should be appropriate to country circumstances, considering their limited options and difficult trade-offs. They must be politically, economically and institutionally feasible, pragmatic, and target overcoming critical constraints.

OECD development partners must instead meet their commitments and support national development strategies. They must resist presuming to know what is best for LDCs, e.g., requiring them to ape Washington and OECD fads.

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Prioritising profits reversed health progress

Anis Chowdhury and Jomo Kwame Sundaram

SYDNEY and KUALA LUMPUR: Instead of a health system striving to provide universal healthcare, a fragmented, profit-driven market ‘non-system’ has emerged. The 1980s’ neo-liberal counter-revolution against the historic 1978 Alma-Ata Declaration is responsible.

Alma-Ata a big step forward

Neoliberal health reforms over the last four decades have reversed progress at the World Health Organization (WHO) Assembly in the capital of the then Socialist Republic of Kazakhstan, now known as Almaty.

Then, 134 WHO Member States reached a historic consensus reaffirming health as a human right. It recognised that heath is determined by environmental, socio-economic and political conditions, not only medical factors narrowly understood.

The Declaration stated, “Governments have a responsibility for the health of their people which can be fulfilled only by the provision of adequate health and social measures”. Also, “The people have the right and duty to participate individually and collectively in the planning and implementation of their health care”.

Countries committed to the fundamental right of every human being to enjoy the highest attainable standard of healthcare without discrimination. They agreed that primary healthcare (PHC) is key to addressing crucial determinants of health.

Alma-Ata eschewed overly ‘hospital-centric’ and ‘medicalised’ systems, instead favouring a more ‘social approach’ to medicine. In the Cold War divided world, the Declaration was a triumph for humanity, promising progress for global health.

It recognised the crucial contributions of multilateral cooperation, peace, social health determinants, health equity norms, community participation in planning, implementation and regulation, and involving other ‘sectors’ to promote health.

Primary healthcare

Some developing countries – e.g., China, Costa Rica, Cuba and Sri Lanka – had already achieved impressive health outcomes at relatively low cost, raising life expectancy by 15 to 20 years in under two decades.

Instead of just curative medicine and clinical care, prevention and public health were given more emphasis. Basic health services, improved diets, safe water, better sanitation, health education and disease prevention became central to such initiatives.

Mainly rural community health workers (CHWs) were trained to help communities address common health problems. Differences in national government approaches, contexts and needs have also shaped PHC outcomes, reach and efficacy, e.g., in delivering healthcare to the poor.

But despite reversals elsewhere, some efforts have continued, even expanded. Even in the 21st century, large-scale PHC efforts have made remarkable health gains, e.g., Brazil’s Programa Saude da Familia and Thailand’s Universal Coverage Scheme.

Lalonde Report turning point

Thus, Alma-Ata inverted health policy priorities, as 90% of health problems were recognised as due to lifestyles, environments and human biology, with only 10% due to the “healthcare system”, as noted by Canada’s 1974 Lalonde Report.

The Lalonde Report reaffirmed WHO’s basic approach. Its 1946 constitution had affirmed, “Health is a state of complete physical, mental, and social well-being and not merely the absence of disease or infirmity”.

The Report’s multidimensional approach to human health marked a turning point, reshaping policy approaches. Similar health assessments, with more holistic understandings, were also influential.

Reports from the UK, USA, Sweden and elsewhere also challenged the dominant medicalised approach to healthcare promoted by big pharmaceutical and other health-related businesses.

Neo-liberal ascendance

Developments since the 1980s have set back and reversed the Alma-Ata commitments. Latin American and other debt crises paved the way for the neo-liberal ‘Washington Consensus’ counter-revolution.

‘Rescue packages’ from the International Monetary Fund and World Bank, especially structural adjustment programmes (SAPs), demanded public spending cuts. These reduced social spending, cutting funding for health.

Thus, many PHC, including CHW programmes did not last. Citing cost recovery, SAPs pressed to impose user fees and privatise health services. The outcomes betrayed Alma-Ata’s promise of greater health equity, and ‘Health for All’ by 2000, undermining prospects for universal health coverage.

The World Bank’s 1993 World Development Report, ‘Investing in Health’, also undermined Alma-Ata. Justifying state healthcare provisioning cuts, it promoted for-profit health financing and other private solutions.

Healthcare financing key

In neoliberal dialect, strengthening health systems meant “enhancing public-private partnerships” among other such interventions. The Bank provided substantial financial support to fund its recommendations.

Despite Alma-Ata, the WHO’s 2000 World Health Report (WHR 2000) criticised developing countries for “focusing on the public sector and often disregarding the – frequently much larger – private provision of care”. It argued, “Health policy and strategies need to cover the private provision of services and private financing”.

Addressing health progress became more ‘siloed’ with the UN’s Millennium Development Goals (MDGs) indicators’ focus on curing and preventing particular diseases. Neither WHR 2000 nor the MDGs reiterated Alma-Ata’s emphasis on social justice, equity and community participation.

Instead, that era saw more healthcare privatisation, public-private partnerships and contracting out of services. After this neo-liberal eclipse, WHO’s attempted U-turn, starting over a decade ago, has emphasised universal health care (UHC) and socio-economic determinants, but the Alma-Ata betrayals prevail.

Thus, the Bank’s International Finance Corporation has been promoting private investments in healthcare services and infrastructure. Deploying billions, it buys public policy influence in Africa, India and beyond.

Philanthropy rules

Unsurprisingly, cash-strapped governments have welcomed financial support from supposed ‘do-gooder’ philanthropists. Many states have to cope with fragile, even crumbling health systems, often overwhelmed by old killers and new epidemics.

Such MDGs-inspired support has typically been via ‘vertical funds’ targeting specific diseases – contrary to Alma-Ata. With more money than WHO’s paltry budget, corporate philanthropy has been remaking policies the world over.

Thus, the policy and ideological prejudices of the Gates Foundation, Global Alliance for Vaccines and Immunisation and Global Fund to Fight AIDS, Tuberculosis and Malaria have obscured Alma-Ata, also reshaping national health priorities.

COVID-19 has unveiled some more effects of various profit-driven healthcare inequities, chronic under-investment in PHC, and over-investment in profit-driven healthcare. They have not only hastened the retreat from ‘health for all’ and UHC, but also made the world more vulnerable to epidemics.

Worse, the interests and priorities of corporate philanthropy have not only raised the costs of, and thus delayed containing the pandemic, but also reversed much of the modest and uneven progress of recent decades, besides worsening inequalities.

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Privatised health services worsen pandemic

Anis Chowdhury and Jomo Kwame Sundaram

SYDNEY and KUALA LUMPUR: Decades of public health cuts have quietly taken a huge human toll, now even more pronounced with the pandemic. Austerity programmes, by the International Monetary Fund (IMF) and World Bank, have forced countries to cut public spending, including health provisioning.

‘Government is the problem’

“India’s COVID crisis: A deadly example of government failure”, “Government failures still hamper [UK] Covid-19 response”. Such headlines have become commonplace as the pandemic rages on, with no sign of ending soon. Their godparents deserve due recognition.

UK Prime Minister Margaret Thatcher claimed, “no government can do anything [good]… people look to themselves first... There is no such thing as society … quality of our lives will depend upon how much each of us is prepared to take responsibility for ourselves and each of us prepared to turn round and help by our own efforts those who are unfortunate”.

US President Ronald Reagan declared, “government is not the solution to our problem; government is the problem”. Inspired by them, government capacities and public sectors have been decimated in recent decades, ostensibly to liberate entrepreneurship and progress.

Four decades of defunding, delegitimization and demoralisation of governments and their personnel since Thatcher and Reagan have taken their toll. Unsurprisingly, most governments have failed to respond more adequately to the pandemic.

To justify social spending cuts, politicians of various hues the world over have been parroting mantras that government is too big and bad. ‘New Democrat’ US President Bill Clinton proudly declared the “era of big government is over”.

Neoliberal reforms worse

This ‘politics of small government’ legitimised privatisation of public assets and services. Authorities have tripped over one another to privatise potentially lucrative public sector duties and activities, while reducing taxes and expenditure.

COVID-19 has revealed the nature and purpose of neoliberal health spending reforms. New policies have included privatisation and contracting out public services. Social spending has not only been cut, but also used to pay private suppliers.

Health system failures highlighted by the pandemic have been long in the making. Four decades of neoliberal policies -- including marketisation, or commodification of healthcare -- have greatly increased private provisioning.

Private healthcare provisioning in low and middle-income countries (LMICs) took off in the 1990s. It gathered pace after the 2008-2009 global financial crisis with more hedge fund and other investments in hospitals and allied health services.

Such provisioning now accounts for most health services in many LMICs, catering mainly to medical tourists and patients with means. Thus, profit considerations and financial markets have remade LMICs’ national health systems.

Unhealthy reforms

Increasingly privatised and outsourced, public health systems in developing countries have been underfunded, undermined and understaffed. Fractured health systems, with poor governance and regulation, have become even less able to respond well to new challenges.

Such changes have been promoted by new aid-sponsored financial arrangements, such as public-private partnerships, as urged by the World Bank. The pandemic has exposed the results as grossly inadequate, ill-suited and vulnerable.

Profitable private services remain parallel to and separate from the public system. The reforms have not only undermined public health systems, but also weakened governments’ ability to cope. Even in rich countries, about 40% of health spending is now for private services.

Neither privatisation nor commodification have improved the quality of care, equity and efficiency of public services. Thus, deregulation, privatisation and liberalisation have squeezed health access, raising morbidity and mortality.

Meanwhile, donors have been diverting aid from governments to non-government organisations (NGOs), especially ‘international’ ones. But patchworks of foreign-run NGOs are no substitute for integrated national public healthcare systems.

Austerity kills

Analyses of economic shocks around the world, from the 1930s’ Great Depression to the 2008-2009 Great Recession, show fiscal austerity kills. In England since 2010, austerity has been linked to 120,000 more deaths and over 30,000 suicide attempts.

Despite declining alcohol abuse and smoking, and without counting flu and other epidemic fatalities, 100 ‘early deaths’ daily were expected in the UK, even before the pandemic. Social security cuts have also been devastating.

Despite growing patient demand and rising healthcare costs, during 2010-2020, the UK National Health Service suffered the “largest sustained fall in … spending as a share of GDP in any period” since its creation after the Second World War.

Earlier, Greece’s 2010 austerity package required cutting its national health budget by 40%. Infant mortality rose 40% after some 35,000 doctors, nurses and other health workers lost their jobs.

As Greeks avoided routine primary healthcare due to long waits and rising drug costs, hospital admissions soared. Meanwhile, mosquito eradication programme cuts led to a resurgence of malaria.

Austerity also worsened Ebola in West Africa. Cutting public health spending from 1990, Guinea, Liberia and Sierra Leone further weakened their already poor health systems, undermining their ability to cope with emergencies. Thus, in the year before the Ebola outbreak, Guinea spent more on debt repayment than public health.

Meanwhile, austerity-driven funding cuts to the World Health Organisation (WHO) by the US, UK and European governments critically delayed responses to the Ebola outbreak, worsening it. Funding shortages also set back needed WHO efforts to respond to future global health crises.

Government not main problem

Health threats posed by the pandemic have not been well addressed by the reforms of recent decades. Some have been made worse, with LMICs particularly hard hit by COVID-19. Unsurprisingly, confidence and trust in governments everywhere have dipped.

In fact, public health investments before the pandemic were projected to yield three times as much in economic growth. Thus, such spending would have not only saved lives, but also accelerated economic expansion.

With COVID-19 endemic, and most government pandemic containment and fiscal capacities in the global South limited, the pandemic will drag on, further setting back progress and worsening inequalities.

Meanwhile, Thatcher and Reagan still haunt us all until the world exorcises their ghosts forever.

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