Structural Adjustment Programmes as Health Policy

Question 1

Post-WWII context

Answer 1

Rise of the US as an economic power

Decline of colonialism, which most of the European countries had been involved in
Bretton Woods meeting established set of institutions meant to create a form of economic integration that would 1) make countries more interdependent upon one another and 2) reduce the likelihood of the sort of major economic crises that preceded the two World Wars
o International Monetary Fund (IMF)
o World Bank
- Both institutions followed the US model of how countries should interact with one another economically

The oil crisis and economic stagnation of the 1970s/80s led to economic crises in low- and middle-income countries (LMICs), who were defaulting on their international loans

Structural adjustment programmes were initiated to ensure LMICs could repay their loans (Woods, 2009):
o	Liberalization (trade + tariffs)
o	Deregulation (making markets more ‘business friendly’)
o	Privatization (resources + sectors)
o	Stabilization (fiscal and monetary policy to ensure debts could be repaid, keep inflation low)

Arguments for/against structural adjustment programmes:
o Side A (against): this set of policies imposed by agencies on countries in exchange for being allowed to borrow money undermined the growth of local industries and health systems; ultimately left the poorest more vulnerable than they were before, without promoting growth
o Side B (for): “where angels dare to tread” – LMICs were in dire economic circumstances; these policies/reforms helped to keep them from falling apart entirely; negative consequences are less severe than they would have been in the absence of structural adjustment programmes

Regardless, there has been a definite move within international financial institutions to recognize that many of their ideological underpinnings are not as sound as they initially thought

Question 2

From structural adjustment programmes to health consequences

Answer 2

See: Kentikelenis, 2017

Health (‘direct effects’ pathway)
o Cuts to spending
- Typically, reductions in staff, treatment/services
o Workforce
- Fear that public sector wage freezes may encourage doctors to leave lower-income countries for high-income countries

Health (‘indirect effects’ pathway)
o Mediated by macroeconomic and institutional reforms
o International financial institutions frequently encourage currency devaluation as one piece of their broader stabilization policies, increasing import prices, and therefore limiting the accessibility of medicines and equipment entering a country (Breman and Shelton, 2006)
o If tariffs and customs are removed as part of a trade liberalization strategy, then trade tax revenues will, at least temporarily, reduce accordingly, further jeopardizing the money available to fund healthcare expenditures (Baunsgaard and Keen, 2010)
o Privatization
- Prioritizes profit

Can affect social determinants of health (see: Wilkinson and Marmot, 2003)
o ‘Social determinants of health’ = macro-level factors
o Deregulation –> environmental effects
- Deregulation of industry—a component of structural adjustment programmes meant to increase the extent to which countries are ‘friendly’ to business—can induce negative environmental externalities, which carry plausible implications for the health of a population, especially insofar as one considers issues such as water cleanliness and general sanitation (Shandra et al., 2008, 2011)
o Tariffs (–> indirect taxes)
o Introduction of ‘user fees’ for various goods/services (e.g., fewer children seem to utilize early childhood education services)

Question 3

The fundamental problem of causal inference

Answer 3

Defenders of the legacy of structural adjustment programs maintain that, because the LMICs subjected to externally-imposed regulations were already in the grip of economic crises, the policies enacted served to prevent the realization of a worse reality; i.e., yielded negative consequences less severe than those which would have materialized in the absence of these programs

Paul Holland addresses the issue of the counterfactual in what he terms the Fundamental Problem of Causal Inference, which states that “[i]t is impossible to observe the value of Yt(u) [treatment] and Yc(u) [control] on the same unit and, therefore, it is impossible to observe the effect of t on u” (Holland, 1986, p. 947)

FOR EXAMPLE:
In setting out to determine whether Greece’s loan from the IMF harmed health within the country, we may be tempted to ‘solve’ the Fundamental Problem of Causal Inference by treating our unobservable counterfactual—health outcomes in a Greece that did not receive an IMF loan—as equivalent to the value of our unit before its exposure to the treatment (i.e., health outcomes in Greece pre-IMF bailout)

The validity of this approach in substantiating a claim of causal inference depends upon the extent to which our homogeneity assumption approximates reality; that is, the extent to which likely health outcomes in a hypothetical Greece that never received an IMF loan are comparable to observed health outcomes in Greece prior to the loan