Rachel Garretson

INTA 295
3/5/2016

Health Spending, Foreign Aid, and Epidemics

Introduction

An epidemic is when an infectious disease becomes widespread within a certain

community at a certain time. In an increasingly globalized world, these epidemics

become more dangerous. Where as before a disease was mostly contained within a

community, today we travel around the world within hours. Local epidemics can become

global epidemics within weeks. Averting these crises can easily tax our health systems

and for those without strong systems, it can easily get out of hand. To combat this, many

governments are increasing spending on their own health care systems, however this is

not enough. In such a globalized world, if an epidemic gets out of hand in one country, it

can easily spread to all the others. Therefore the worlds health is only as strong as its

proverbial weakest link. That is where foreign aid comes in. Wealthy countries give

billions of dollars to poorer countries to help them strengthen their health care systems.

However there is debate as to whether or not these billions are actually helping at all.

During this literature review we will establish why poorer countries and countries in

economic crises are more vulnerable to epidemics, provide possible explanations as to

why efforts within these countries are failing to strengthen their health care systems, and

finally, explain why international aid may not be solving these problems.

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Literature Review

Epidemics and Economic crises

Economic crisis often results in an increase in infectious disease among the

population of a country. During economic crisis countries are forced to decrease spending

in certain areas. Unfortunately, health is an area often cut, and other programs that can

impact health and the spread of infectious disease, such as housing and food programs for

the poor become strained due to an influx of people. These effects of economic crisis

have both short-term and long-term ramifications on a countrys health.

The short-term effects are the production of a super spreading environment in

which there is escalation in disease exposure or decline host immunity (Bonovas, and

Nikolopoulos 2012). Bonovas and Nikolopoulos studied the impact of Greeces economic

crisis on infectious diseases in its population and found that Greece indeed had an

increase in epidemic outbreaks and a higher mortality rate than those found in it more

prosperous neighbors. One of the reasons found for this was in increase in the poor, the

unemployed, the homeless, and the drug addicts many of which live in close quarters

which increases the spread of infectious disease. Furthermore, there was an increase in

migrants who had different disease epidemiology in their area of origin (Bonovas, and

Nikolopoulos 2012). All these factors lead to the production of a super spreading

environment in which disease spread more rapidly.

As a result of this super spreading environment, the health care system, with its

decreased funding, is unable to keep up with and control outbreaks. In Greece there was

found to be less treatment availability, declining quality of public sector health system

resources; and underfunded or ineffective public health interventions (Bonovas, and

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Nikolopoulos 2012).

Furthermore, in Peru it has been found that there was an increase of about 2.5

percentage points in the infant mortality rate for children born during the crisis of the late

1980s (Paxson and Schady 2005). This is because often times families are forced to

spend less on the health of their children. For example they may not be able to afford

nutritious foods or medical care for mothers and infants (Paxson and Schady 2005).

Economic crisis clearly has an impact on the health of a countrys population. The

longer or deeper the economic crisis is, the greater the impact on the citizens of a country.

However poor countries that live in a perpetual state of economic crisis are at even more

of a disadvantage because they had no efficient or effective existing healthcare structure

to begin with.

Disproportionate Spending

Prevention is one of the most important aspects of tackling epidemics. Isolating

those infected or preventing the spread via inoculations and vaccinations is key in

fighting infectious disease. When observing the handling of HIV/AIDS however, we see

a disproportionate amount of spending on treatment and care over prevention. In tackling

HIV/AIDS the USs spending has focused on testing in prenatal clinics, antiretrovirals to

prevent mother-to-child transmission, manufacturing of condoms, and prevention

programs that would reach sex workers, men who have sex with men, and injecting drug

users (Schwartlnder, Stover, Walker, Bollinger, Gutierrez, McGreevey, Opuni, Forsythe,

Kumaranayake, Watts, and Bertozzi 2001). However, in many middle and low-income

countries the majority of the money is spent on treatment.

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 Despite the recognition of its importance, prevention receives 21% of HIV

resources in comparison to 53% allocated to treatment and care (Amico, Gobet, Avila-

Figueroa, Aran, and De Lay 2012) in middle and low-income countries. While spending

on treatment and care is very important, it does not help to prevent new cases, and with

more and more cases, spending on care must increase too, whereas, if emphasis is placed

on prevention, less new cases will occur and the spending on care can be stabilized. Some

believe the current global economic recession will provoke thought on the part of the

international community about national strategies on spending (Izazola-Licea,

Wiegelmann, Arn, Guthrie, Lay, and Avila-Figueroa 2009). They advocate analysis of a

country's epidemic to create basis from which to make evidence-based decisions (Izazola-

Licea, Wiegelmann, Arn, Guthrie, Lay, and Avila-Figueroa 2009) and to ensure that

countries are achieving the greatest impact possible.

On top of that, the majority of spending on prevention in these middle to low-

income countries is composed of aid from other countries. International donors contribute

65% of all prevention resources and up to 93% of funding in low-income countries

(Amico, Gobet, Avila-Figueroa, Aran, and De Lay 2012). Even prevention spending by

the original country tends to target the general population rather than the most-at-risk-

populations (MARPs) which means that funding for prevention activities among MARPs

rely almost exclusively on international donors (Arn-Matero, Amico, Arn-Fernandez,

Gobet, Izazola-Licea, and Avila-Figueroa 2011). This means that any decrease in foreign

aid could have grave impacts on at-risk communities. Not viewing prevention and

treatment be as competing interests, but as complementary activities is very important

(Amico, Gobet, Avila-Figueroa, Aran, and De Lay 2012), however the gap in spending

4
between prevention and treatment, and beyond that, the gap between the original

countrys spending on prevention and foreign spending indicates a lack of commitment to

one of the key factors of combatting epidemics.

Negative Impact of Foreign Aid

Some academics and policy makers have come to believe that foreign aid can be

detrimental to the country receiving it. While few argue that cutting off all foreign aid

provided by foreign governments and NGOs is the solution, people believe that the

current way in which foreign aid is being distributed is haphazard and inefficient at best,

and at worst, harmful.

Government spending on health from domestic sources is an important gauge of a

government's commitment to the health of its citizens (Lu, Schneider, Gubbins, Leach-

Kemon, Jamison, and Murray 2010). Furthermore, foreign aid often has strings attached

and thus can be an unreliable source of income. This means that government spending

from domestic sources is important for the sustainability of health programs (Lu,

Schneider, Gubbins, Leach-Kemon, Jamison, and Murray 2010). To benefit a country

long term, it is argued that any foreign aid in a health care setting should be carefully

targeted and specific goal-oriented projects (Acerra, Iskyan, Qureshi, and Sharma 2009)

and should be highly coordinated with the local governments. In this way foreign

governments and NGOs can be sure to contribute to the actual needs of that country.

Additionally, governments tend to reduce funding to their health systems and

other government ministries that spend money on health when large amounts of aide for

health is given to them (Lu, Schneider, Gubbins, Leach-Kemon, Jamison, and Murray

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2010). This means that although ostensibly these countries are getting more money for

their health care systems and the systems should therefore be improving, the total amount

spent on health care tends to stay the same, or even decline if the governments in

question reallocate more money from their health budget then is being provided in

foreign aid. According to some studies, development assistance for health is an imporant

factor leading to the decline in a governments spending on health from domestic sources

(Lu, Schneider, Gubbins, Leach-Kemon, Jamison, and Murray 2010).

Theory and Hypothesis

Based on the academic knowledge available, two questions must be asked. First,

Does the amount of spending on public health actually have an effect on cases of

infectious disease? Second, does foreign aid, in the form of development assistance for

health, have an effect on cases of infectious disease?

We expect to find that increased government spending on public health will

decrease epidemic disease within that country. This is because the citizens will have

better access to preventative measures such as medicines and vaccinations. Furthermore,

in countries where more is spent on public health, there will be better, more efficient

infrastructure to handle infectious diseases before they spread. Therefore:

H1: The higher the percentage of GDP spent on public health, the lower the cases

of epidemic diseases.

Foreign aid on the other hand is more murky a case. While it theoretically

increases the overall spending on a countrys public health, as stated in the literature

review, this is not always the case as some countries reallocate funds from health care to

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other areas when they receive foreign aid. On top of this, many argue that foreign aid is

less efficient then funding by the countrys government. Taking these two points into

consideration, we expect to find that foreign aid, in the form of development assistance

for health will have a negative affect on a countys ability to deal with infectious diseases.

Therefore:

H2: The greater a countys dependence on foreign aid, in the form of development

assistance for health, the greater the cases of epidemic diseases.

Research and Design

Government spending on health care systems will be measured as a percentage of

total GDP. It is best to measure it as a percentage of GPD instead of the raw numbers

because large countries with many citizens may spend in total more on health care than

smaller countries but be actually be spending less of a portion of their GDP on health

than the smaller country.

Unfortunately data on foreign aid in the form of development assistance for health

was unavailable to me so instead total foreign direct investment, as a percentage of that

countrys GDP will be used to approximate that variable. This may lead to inconclusive

data since foreign aid earmarked for areas other than health will be counted the same as

that spent on health however it is the data best available.

Lastly, cases of epidemic diseases will be measured as cases of certain diseases

reported by the government to the World Health Organization in the year of 20011.

Unfortunately, many epidemics are regional and thus when variables are restricted to one

disease it affects the data so in an effort to counteract this I chose Cholera, Yellow fever,

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and Malaria since they are fairly widespread diseases.

The control variables used during the section the data analysis section are

pressures from absence of public infrastructure and services and human development.

Absence of public infrastructure such as public safety, sanitation, education, and access to

basic utilities often is associated with poverty and uncertainty which effects a

populations resistance to disease on a number of levels. For example, an education in the

topics of germs and the basics of disease prevention with is included in most primary

school systems would have an obvious positive affect on a populations awareness of

disease and ability to take basic measures to stay healthy. Human development index is

the other control variable because it combines element of non-epidemic health, schooling,

and education. These variables are all things that could affect the main IVs and DV in

similar ways as absence of public infrastructure.

Thus to test these hypotheses we will be employing a cross-sectional design in

which I will be analyzing the relationships between three variables: government spending

on public health, foreign aid, and cases of epidemic diseases. The first two variables,

government spending and foreign aid, as well as the control variables were taken from

the Global 11 data set provided for us in class while the data on Cholera, Yellow fever,

and Malaria were taken from public data sets found on the World Health Organizations

webpage. Fist we will do bivariate regression analysis with each of the diseases; Cholera,

Yellow fever, and Malaria, and each of the independent variables; government spending

on public health and foreign aid. Then we will be doing a multivariate regression analysis

which each of these, this time with the control variables pressures from absence of public

infrastructure and services and human development.

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 If we were to conduct a more extensive research project I would find more precise

variables with to test my hypotheses. I would find data on foreign aid in the form of

development assistance for health as a percentage of GDP. I would also have to find a

way to get a more comprehensive and faire measurement of epidemics across countries.

Data Analysis

Bivariate Regression

For bivariate regression we compared each dependent variable, Cholera, Yellow

fever, and Malaria with each independent variable government spending on public health

and foreign aid.

In Table 1.1 its constant is 36,794 meaning when Government Spending on

Health is zero, than cases of Cholera is 36,794. The correlation coefficient is -2,359

meaning for every one percent increase in Government Spending on Health; there is a

decrease of 2,359 cases of Cholera. With these we calculate the equation:

(Cholera)= 36,794 -2,359(Gov. Spending on Health)

However, in Table 1.1 we also see that the R-squared is .053 meaning that only 5.3% of

variance in Cholera cases can be explained by Government Spending on Health. Its

correlation coefficient (r) is .231 meaning there is only has a weak positive relationship

between the two variables and it is only significant at the 90% significance level.

In Table 1.2 its constant is 5,291 meaning when Government Spending on

Health is zero, than cases of Yellow Fever is 5,291. The correlation coefficient is -355

meaning for every one percent increase in Government Spending on Health; there is a

decrease of 355 cases of Yellow Fever. With these we calculate the equation:

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 (Yellow Fever)= 5,291 -355(Gov. Spending on Health)

However, in Table 1.2 we also see that the R-squared is .023 meaning that only 2.3% of

variance in Yellow Fever cases can be explained by Government Spending on Health. Its

correlation coefficient (r) is .151 meaning there is only has a weak positive relationship

between the two variables and it too is only significant at the 90% significance level.

In Table 1.3 its constant is 248,821 meaning when Government Spending

on Health is zero, than cases of Malaria is 248,821. The correlation coefficient is 993

meaning for every one percent increase in Government Spending on Health; there is an

increase of 993 cases of Yellow Fever. With these we calculate the equation:

(Malaria)= 248,821 -355(Gov. Spending on Health)

This not only doesnt support H1 but actually seems to directly contradict it. More

research would have to be done to explain these results. It may be explained however in

that the R-squared is 0 meaning that only 0% of variance in Malaria cases can be

explained by Government Spending on Health. Its correlation coefficient (r) is .008

meaning there is only has an extremely weak positive relationship between the two

variables and it is not significant on any level. An explanation for these inconclusive

results is that of all the diseases I chose, Malaria is the most regional and this has

obviously affected the results.

Over all Tables 1.1 through 1.3 seem to disprove H1 and thus we fail to reject the

null hypothesis that there is no relationship between Government spending on health and

epidemic disease cases. However, as mentioned above there were limitations in the data

available that I believe contributed to this negative result.

In Table 1.4 its constant is 10,834 meaning when Foreign aid is zero, than

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cases of Cholera is 10,834. The correlation coefficient is -195 meaning for every one-unit

increase in Foreign; there is a decrease of 195 cases of Cholera. With these we calculate

the equation:

(Cholera)= 10,834 -195(Foreign Aid)

However, in Table 1.4 we also see that the R-squared is .003 meaning that only 0.3% of

variance in Cholera cases can be explained by Foreign Aid. Its correlation coefficient (r)

is .052 meaning there is only has a very weak positive relationship between the two

variables and it is only significant at the 90% significance level.

In Table 1.5 its constant is 18 meaning when Foreign aid is zero, than

cases of Yellow Fever is 18. The correlation coefficient is 0.33 meaning for every one-

unit increase in Foreign aid; there is an increase of 0.33 cases of Yellow Fever. With these

we calculate the equation:

(Yellow Fever)= 18 -0.33(Foreign Aid)

However, in Table 1.5 we also see that the R-squared is .001 meaning that only 0.1% of

variance in Cholera cases can be explained by Foreign Aid. Its correlation coefficient (r)

is .034 meaning there is only has a very weak positive relationship between the two

variables and it is only significant at the 90% significance level.

In Table 1.6 its constant is 158,240 meaning when Foreign aid is zero, than cases

of Malaria is 158,240. The correlation coefficient is 20,137 meaning for every one-unit

increase in Foreign aid; there is an increase of 20,137 cases of Malaria. With these we

calculate the equation:

(Malaria)= 158,240 -20,137(Foreign Aid)

However, in Table 1.6 we also see that the R-squared is .102 meaning that 10.2% of

11
variance in Malaria cases can be explained by Foreign Aid. Furthermore, its correlation

coefficient (r) is .319 meaning there is only has a moderately strong positive relationship

between the two variables and it is significant at the 99% significance level.

Over all Tables 1.4-1.6 do not prove H2. While Malaria gives credit to H2, and

based only it its data we could reject the null hypothesis that there is no relationship

between Foreign aid and cases of epidemic diseases, it is only one of the three diseases

used. Furthermore, as mentioned above, due to its more regional nature data from Malaria

cases is more suspect than those from Cholera and Yellow fever.

Multivariate Regression

In Table 2.1 its constant is -238,702 meaning when all IVs are zero, than cases of

Cholera is -238,702. Standardized coefficients cant be used since the units of

measurement are not all the same. The correlation coefficient for Government spending

on health is -777 meaning for every one percent increase in Government Spending on

Health; there is a decrease of 777 cases of Cholera controlling for the other IVs. The

correlation coefficient for absence of public infrastructure and services is 20,169 meaning

for every one-unit increase in the absence of public infrastructure; there is an increase of

20,169 cases of Cholera controlling for the other IVs. The correlation coefficient for

human development is 213,631 meaning for every one-unit increase in the human

development index; there is an increase of 213,631 cases of Cholera controlling for the

other IVs. With these we calculate the equation:

(Cholera)= -238,702 -777 (Gov. Spending on Health)+ 20,169(Absence of Public Infra.)

+213,631 (Hum. Development)

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However, in Table 2.1 we also see that the R-squared is .156 meaning that the control

variables increased it so that 15.6% of variance in Cholera cases can be explained by the

Independent variables. Unfortunately the control variables make it so Government

spending on health is no longer statistically significant.

In Table 2.2 its constant is 297 meaning when all IVs are zero, than cases of

Yellow fever is 297. The correlation coefficient for Government spending on health is .

065 meaning for every one percent increase in Government Spending on Health; there is

a decrease of .065 cases of Yellow fever controlling for the other IVs. The correlation

coefficient for absence of public infrastructure and services is -9.9 meaning for every

one-unit increase in the absence of public infrastructure; there is a decrease of 9.9 cases

of Yellow fever controlling for the other IVs. The correlation coefficient for human

development is -325 meaning for every one-unit increase in the human development

index; there is an decrease of 325 cases of Yellow fever controlling for the other IVs.

With these we calculate the equation:

(Yellow fever)= 297 -.065(Gov. Spending on Health) -9.9(Absence of Public Infra.)

-325(Hum. Development)

However, in Table 2.2 we also see that the R-squared is .119 meaning that the

control variables increased it so that 11.9% of variance in Yellow fever cases can be

explained by the Independent variables. Unfortunately the control variables make it so

Government spending on health is no longer statistically significant.

In Table 2.3 its constant is 2,402,770 meaning when all IVs are zero, than cases of

Malaria is 2,402,770. The correlation coefficient for Government spending on health is

8,497 meaning for every one percent increase in Government Spending on Health; there

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is a decrease of 8,497 cases of Malaria controlling for the other IVs. The correlation

coefficient for absence of public infrastructure and services is -86,239 meaning for every

one-unit increase in the absence of public infrastructure; there is a decrease of 86,239

cases of Malaria controlling for the other IVs. The correlation coefficient for human

development is -2,847,491 meaning for every one-unit increase in the human

development index; there is an decrease of 2,847,491 cases of Yellow fever controlling

for the other IVs. With these we calculate the equation:

(Malaria)= 2,402,770 +8,497(Gov. Spending on Health) -86,239(Absence of Public

Infra.) -2,847,491(Hum. Development)

However, in Table 2.3 we also see that the R-squared is .228 meaning that the control

variables increased it so that 22.8% of variance in Malaria cases can be explained by the

Independent variables. Unfortunately the control variables make it so Government

spending on health is no longer statistically significant.

Tables 2.1-2.3 do not support H1 either as they indicate that the control variables

are more statistically significant than Government spending on health.

In Table 2.4 its constant is -263,253 meaning when all IVs are zero, than cases of

Cholera is -263,253. Standardized coefficients cant be used since the units of

measurement are not all the same. The correlation coefficient for Foreign aid is -132

controlling for the other IVs. The correlation coefficient for absence of public

infrastructure and services is 21,642 controlling for the other IVs. The correlation

coefficient for human development is 224,333 controlling for the other IVs. With these

we calculate the equation:

(Cholera)= -263,253 -132(Gov. Spending on Health)+ 21,642(Absence of Public Infra.)

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 +224,333(Hum. Development)

However, in Table 2.4 we see that the R-squared is .389 meaning that the control

variables increased it so that 38.9% of variance in Cholera cases can be explained by the

Independent variables. Unfortunately the control variables make it so Government

spending on health is no longer statistically significant.

In Table 2.5 its constant is 297 meaning when all IVs are zero, than cases of

Yellow fever is 297. The correlation coefficient for Foreign aid is .226 controlling for the

other IVs. The correlation coefficient for absence of public infrastructure and services is

-9.9 controlling for the other IVs. The correlation coefficient for human development is

-325 controlling for the other IVs. With these we calculate the equation:

(Yellow fever)= 297 +.226(Gov. Spending on Health) -9.9(Absence of Public Infra.)

-325(Hum. Development)

However, in Table 2.2 we also see that the R-squared is .119 meaning that the

control variables increased it so that 11.9% of variance in Yellow fever cases can be

explained by the Independent variables. Unfortunately the control variables make it so

Government spending on health is no longer statistically significant.

In Table 2.6 its constant is 2,437,700 meaning when all IVs are zero, than cases of

Malaria is 2,437,700. The correlation coefficient for Government spending on health is

8,497 controlling for the other IVs. The correlation coefficient for absence of public

infrastructure and services is -86,239 controlling for the other IVs. The correlation

coefficient for human development is -2,847,492 controlling for the other IVs. With these

we calculate the equation:

(Malaria)= 2,402,770 +8,497(Gov. Spending on Health) -86,239(Absence of Public

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 Infra.) -2,847,492(Hum. Development)

However, in Table 2.6 we also see that the R-squared is .228 meaning that the control

variables increased it so that 22.8% of variance in Yellow fever cases can be explained by

the Independent variables. Unfortunately the control variables make it so Government

spending on health is no longer statistically significant.

Tables 2.4-2.6 do not support H2 either as they indicate that the control variables

are more statistically significant than Government spending on health.

Conclusion

In conclusion, few of my results were statistically significant except at the 90%

significance level. Even that was taken away once control variables were used. This

means that at this point, with this set of data, there is no indication that either government

spending on health or foreign aid given to a country has an impact on epidemics in that

country. It is determined that the research question asked was unable to be answered

since the research conducted contradicts our hypothesis but was also flawed leaving us to

conclude that better formatted and informed research might more fully answer our

question. Once again, shortcomings such as no access to information on how much of the

foreign aid given to countries was spent on their health care system and the regional

nature of infectious diseases caused faults in our research. Future research would have to

gain access to the foreign aid information and solve the problem of finding a more

accurate way to measure epidemic disease that can be applied cross-nationally.

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Appendix

Table 1.1:
Bivariate Regression IV: Government Spending on Public Health
DV: Cholera

Table 1.2:
Bivariate Regression IV: Government Spending on Public Health
DV: Yellow Fever

17
Table 1.3:
Bivariate Regression IV: Government Spending on Public Health
DV: Malaria

Table 1.4:
Bivariate Regression IV: Foreign Aid
DV: Cholera

18
Table 1.5:
Bivariate Regression IV: Foreign Aid
DV: Yellow Fever

Table 1.6:
Bivariate Regression IV: Foreign Aid
DV: Malaria

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Table 2.1:
Bivariate Regression IV: Government Spending on Public Health
DV: Cholera
Controls: Absence of Public Infrastructure & Human Development

20
 Table
2.2:
Bivariate Regression IV: Government Spending on Public Health
DV: Yellow Fever
Controls: Absence of Public Infrastructure & Human Development

21
22
Table 2.3:
Bivariate Regression IV: Government Spending on Public Health
DV: Malaria
Controls: Absence of Public Infrastructure & Human Development

23
Table 2.4:
Bivariate Regression IV: Foreign Aid
DV: Cholera
Controls: Absence of Public Infrastructure & Human Development

24
Table 2.5:
Bivariate Regression IV: Foreign Aid
DV: Yellow Fever
Controls: Absence of Public Infrastructure & Human Development

25
Table 2.6:
Bivariate Regression IV: Foreign Aid
DV: Malaria
Controls: Absence of Public Infrastructure & Human Development

26
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