2. Health and Economic Development: An Interrelationship
The nation’s health and economic development are highly interrelated. Because of this, it is confusing to identify which is the cause and which is the effect. However, the general view is that good health results from economic growth and development (i.e. that economic growth and development, through impact on per capita income, is the determinant of good health). However, there is an alternative view which states that economic growth and development results from good health (i.e. greater labor productivity and regularity at work results in greater economic growth and development). While it is difficult to differentiate between the cause and effect, it is certain that good health is essential for economic growth and sustained economic development.
It is purported that good health contributes to sustainable economic development since it is one of the basic forces which drive the economy. These forces in the economy can be broadly categorized as forces which raise or depress income.3 Good health helps raise income since it maintains and promotes labor’s efficiency and productivity. This is especially true in a developing, agricultural country, at the inception of the industrialization process.4 In other words, good health is a human capital which enables full utilization of all passive factors of production.
The other side of the coin is that poor health will impede economic growth through cost of illness, which reduce labor productivity and lead to irregularity at work. These costs comprise of medical expenses related to diagnosis and treatment, opportunity cost of income, the pain and suffering borne by the patient and other members of the household due to illness etc. The higher the short-run cost, the higher will be the burden on the household. All these factors contribute to reduction in income. However, the poor health of the nation’s population will also have long-term consequences. The fall in income affects the aggregate level of saving and consequently, capital formation. Similarly, reduction in labor supply and fall in labor productivity at the household level will, eventually, cause the nation’s labor productivity and labor supply to decline. This, in fact, affects economic growth and development of the nation in the long-term.
There is another aspect, through the channel of poverty and the “poverty spiral” which is important for economic development. This is because the nature of the nation’s population may magnify the cost of a disease. Thus if the economic cost of illness is high, this will likely push the non-poor into the poor category and the poor may fall to hard-core or marginal poor category which will result in a drain on economic growth and development. Thus, poor health is a major generator of poverty and impedes economic growth and development in the long run.5 This poverty and health inter-linkage for a nation creates a quagmire of poor health within the already existing vicious circle of poverty. As a result, poor health becomes a risk factor to poverty and an impediment to economic growth and development.6
Fortunately, good health can contribute to economic growth and development as well as to poverty alleviation. This occurs through appropriate and effective health policy which should put forward a conducive environment for the health sector to play its catalytic role in the nation’s economic development. Thus, having an appropriate health policy for the health sector contributes significantly to a healthy population and achieving the goal of sustainable economic development.
3. Review of Nepalese Health Policies as Reflected in the Various Development Plans
The previous section has established the important link between a nation’s health and economic development. In this regard, the necessity for appropriate health policy which positively affects the health sector and through it the health of the nation, has been highlighted. For Nepal, it is thus essential to determine if health policies are given due