Structural Adjustment and Health

2. Structural Adjustment and Health Thomas Stubbs ths27@cam.ac.uk http://www.tstubbs.net SOCP304 – 14B: Health, Wellbeing and Policy 1st October 2014

3. A Greek Tragedy

4. Introduction • International Monetary Fund (IMF or Fund) • Structural Adjustment Programs (SAPs) • The IMF and Health Spending • In Focus: IMF Programs and Health Spending in Low-Income Countries • Conclusions

5. International Monetary Fund • IOs, global economic governance, and the IMF • History and mandate • Technical support • Lending (‘lender of last resort’) • 1980s and late-2000s lending boom • Influence and legacy • Fund programs (SAPs) • ‘Conditionality’

6. Countries Under IMF Arrangements: Sub-Saharan Africa, 1985-2013

7. Total IMF conditions, 1985-2013

8. Structural Adjustment • Evolution of conditionality • Core competencies • Extension to non-core • Country ownership and poverty reduction • Controversial conditions • Devaluation • Trade liberalisation • Fiscal discipline • Consumption taxes • Privatisation

9. Evolution of conditionality in non-core areas

10. Structural Adjustment • Some general criticisms of Fund programs • Poor track record • ‘One size fits all’ • ‘Mission creep’ • Micro-management (e.g. size of bread loaf) • ‘Loose coupling’ of discourse and practice • Agents of neoliberalism and/or neoimperialism

11. IMF Programs and Health Spending • Relationship between health policy and SAPs has been subject of intense controversy • Recent studies criticizing the IMF: • Stuckler, King & Basu 2008 • Hoddie & Hartzell 2013 • Reeves et al 2013 • Plenty of anecdotal evidence, often polemical

12. IMF Programs and Health Spending

13. IMF Programs and Health Spending in Low-Income Countries • But… • Clements, Gupta & Nozaki, 2013 • According to the study, IMF-supported programmes have a positive and significant effect on heath-spending in low-income countries. • We set out to replicate and extend this study (Kentikelenis, Stubbs, & King, forthcoming)

14. IMF Programs and Health Spending in Low-Income Countries: Mechanisms • Direct pathways • Conditions to protect social expenditures • Conditions to reshape the health sector • Resource effect • Indirect pathways • Conditions on budget deficit • Conditions on public sector wage bill • Conditions on devaluation • Differential effects in the short- and long-term

15. IMF Programs and Health Spending in Low-Income Countries: Research Design • Quantitative analysis • Selection bias [Heckman method] • Short- and long-term effects [error correction model] • Control for confounding variables [controls, fixed-effects] • 63 LICs for the period 1985-2009 • Dependent variables • Public health spending as a share of GDP • Public health spending as a share of discretionary government spending • Public health spending per capita • Explanatory variable • Presence of an IMF program in a given year

16. IMF Programs and Health Spending in Low-Income Countries: Findings • Entire sample (n=63) • No relationship between IMF programs and health spending • Split into SSA (n=30) and non-SSA group (n=33) • Basis for the regional split is the exceptional circumstances of SSA and ‘special treatment’ by IMF • Non-SSA: Negative relationship (“IMF programs decrease health spending”) • SSA: Positive relationship (“IMF programs increase health spending”)

17. Changes in health spending as share of GDP when on IMF program

18. IMF Programs and Health Spending in Low-Income Countries: Discussion • Interpreting the findings on SSA • Encouraging, but… • Health spending originally very low • Near-constant presence of Fund programs • Failure to meet internationally agreed goals • Interpreting the findings on non-SSA • Coheres with standard arguments by IMF critics

19. Conclusions • Public health spending is not always and necessarily beneficial, but… • Health systems need both provisions of funds and a stable funding environment • Austerity measures and ill-conceived structural reforms have tangible social costs(e.g. A Greek Tragedy)

20. Recommended Reading • Vreeland, J. (2007). The International Monetary Fund: Politics of Conditional Lending. London: Routledge. • Stuckler, D. & Basu, S. (2014). The Body Economic: Why Austerity Kills. New York: Basic Books.

21. References • Clements, B., Gupta, S., & Nozaki, M. (2013). What happens to social spending in IMF-supported programmes? Applied Economics, 48(28), 4022–4033. • Gupta, S. (2010). Response of the International Monetary Fund to its critics. International Journal of Health Services, 40(2), 323–326. doi:10.2190/HS.40.2.l • Hoddie, M., & Hartzell, C. (2013). Short-term pain, long-term gain? The effects of IMF economic reform programs on public health performance. Social Science Quarterly. doi:10.1111/ssqu.12068 • Kentikelenis, A., Karanikolos, M., Reeves, A., McKee, M., & Stuckler, D. (2014). Greece’s health crisis: From austerity to denialism. Lancet, 383(9918), 748–753. • Kentikelenis, A., Stubbs, T., & King, L. (Under Review). Structural adjustment and public spending on health: Evidence from IMF programs in low-income countries. • Reeves, A., McKee, M., Basu, S., & Stuckler, D. (2013). The political economy of austerity and healthcare: Cross-national analysis of expenditure changes in 27 European nations 1995-2011. Health Policy. doi:10.1016/j.healthpol.2013.11.008 • Stuckler, D., King, L., & Basu, S. (2008). International Monetary Fund programs and tuberculosis outcomes in post-communist countries. PLoS Medicine, 5(7), 1079–1090. doi:10.1371/journal.pmed.0050143