GLOBAL HEALTH PERSPECTIVES SERIES: HOW WILL THE GLOBAL ECONOMIC CRISIS IMPACT THE HEALTH OF THE WORLD'S POOR?

The effects of the economic crisis in the United States are being felt worldwide. While the downturn has largely occurred in wealthier nations, the poor in low-income countries will be the likely victims. Past economic downturns have been followed by substantial drops in foreign aid to developing countries.1 Past economic crises have basically triggered two reactions from donor countries: cuts in government foreign aid and decreases in charitable contributions by large corporations and foundations (although decreases in the latter may be offset to some degree by contributions from private sources, who may be more likely to give, especially to charities, than in good economic times).2 Even if charitable giving continues, government foreign aid has generally seen drastic cuts during past economic crises. Figure 1 illustrates the declines and recoveries that occurred in foreign assistance spending by Japan and Scandinavian donor countries after they experienced financial crises in the early 1990s. In addition to decreased foreign assistance spending by governments, contributions from some major sources of private funding also fall as profit margins shrink in times of economic crises. Foundations, for example, whose endowments are often invested in the stock market, have fewer resources for making grants to health and social programs.3 While the decreases in foreign aid cited above do not tell us how much the funding of health programs declined, the following numbers suggest that health could suffer in a major way. Net overseas development assistance from member countries of the Organization for Economic Cooperation and Development (OECD) to developing countries amounted to almost US$73 billion in 2007, according to the Organization's Development Assistance Committee.4 Any substantial drop in foreign aid to developing countries is likely to cut the funding of GLOBAL HEALTH PERSPECTIVES SERIES: HOW WILL THE GLOBAL ECONOMIC CRISIS IMPACT THE HEALTH OF THE WORLD'S POOR? As richer countries buy less from low-income countries, revenues decrease, which lowers worker incomes and raises unemployment. Health and social programs targeting the poor are often the first victims of budget cuts,download.