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Research paper on Lending Institutions Healthcare and Human Capital

Lending Institutions Healthcare and Human Capital

Introduction

The countries of the world are categorized into two main groups. The first group comprises of nations that are highly industrialized, politically and economically stable, and have the highest levels of individual health. The other category does not have all the above, and the nations in this group are called developing countries. One of the main features of a developing nation is having Gross National Income (GNI) equivalent to, or less than US$11,905. Developing nations usually rely on international lending organizations like the World Bank and IMF (International Monetary Fund) for the facilitation of their development projects in healthcare, human capital and other social development projects. Brazil is among the developing nations that depend on the global lending institutions in order to run its economy.

This study will be focused on how the international lending institutions have impacted the social, economic and political development of Brazil, and also how the country has used foreign aid in enhancing healthcare.

Brazil and Lending Institutions

Brazil is categorized among the developing nations, but has of late been classified as an emerging market economy (EME). An EME is a country whose economy is growing to the status of the developed nations.’ Brazil is geographically a large country located in South America, endowed with several natural resources. Danher argues that, Brazil is a major coffee producer. Besides, it also produces corn, cocoa, oranges, animal products and various manufactured goods (P. 52). The forest cover of the country goes beyond the combination of Canada and the United States forest cover. Despite its richness in natural resources, millions of citizens in Brazil occasionally go to bed hungry. A majority of Brazil’s population earn less than 100 pounds. Most families have been pushed to living in crowded city slums because of the rapid commercialization of agriculture, making the country to be listed among the most unequal globally.

The financial problems of Brazil emerged as a result of corruption and dictatorial government. The IMF and World Bank interfered in order to improve the exchange rates and avoid inflation. For so long, the Brazilian government worked closely with the two institutions in settling the foreign debt, but the nation’s debt situation proved to be deteriorating. Before getting any help from the IMF, Brazil had to accent to its conditions, which include implementation of the SAPs (Structural Adjustment Programs). The SAPs entailed taking measures, like the liberalization of foreign exchange, minimization of growth in the money supply, minimization of government spending, elimination of subsidies and removal of price controls among other measures.

Brazil had to adhere to the conditions set by the IMF in order to sustain its economy. When the nation liberalized its foreign market, complaints were raised on a significant growth in imports, which was not healthy for its advancing economy (Peet, 2003, P. 166). The substantiality of IMF conditions could benefit Brazil through access to foreign markets for its agricultural products; however, the country is still faced with market barriers for its products. The broad market opening impacted trade deficit, as well as devaluation of Brazil’s currency.

Although the global lending institutions failed to cut down inequality in Brazil, their policies assisted the country in eradicating its debt crisis, besides stabilizing its economy. By using the Washington Consensus sponsored by IMF and World Bank, the Brazilian government implemented a fiscal policy, which targeted at reducing government salaries, development programs and cutting down public sector investment (Crocitti & Vallance, 2000, P 207). The government also embraced a tight monetary policy that featured reduced money supply, raising interest rates and limitation of credit. In order to encourage trade balance, the government offered subsidies to exporters, devalued the currency and imposed limits on imports. Even after making huge payments to the global lending institutions, the foreign debt of the country still hiked. The conditions of IMF and World Bank impacted the increase in unemployment, and also basic products.

How a Healthy Population Strengthens the Economy

In many societies healthcare investment is a priority since a healthy population is more productive compared to one which is unhealthy. Healthcare performance is closely related to economic prosperity; therefore, it is the responsibility of the government to ensure that health facilities are financially stable. The lending institutions have created policies for ensuring that developing nations have taken the appropriate measures towards enhancing healthcare in their countries. UN has realized that health is a pre-requisite for sustainable development, and has encouraged countries to partner and cooperate on international levels to strengthen health systems through financing, training and sustaining healthy workforce, which is critical for economic development (Decisions by Topic, n.d).

The Brazilian government has imposed healthcare as a constitutional right. Both the private sector and the government are responsible for the provision of healthcare in the country while the Health Ministry conducts national health policy. After the declaration of the independence of Brazil in 1822, the monarchy took control of businesses in cities; however, it forgot to make health investments. In 1889, the government formulated major initiatives on healthcare for curbing rapid population growth and eradication of serious ailments (USA Int’l Business Publications, 2013, P. 29).

The impacts of a healthy population are always very clear. A country with strong and healthy individuals finds it quite easy to achieve sustained growth. Brazilian government believes that the prevention of diseases will result into a strong workforce, therefore, taking the task of providing primary healthcare. A healthy population has assisted the country is conducting checks on its population, since healthcare facilities educate patients on measures for family planning and disease prevention. An increase in life expectancy from 69.66 in 1998 to 73.5 in 2011 indicates economic growth in Brazil (USA Int’l Business Publications, 2013, P. 36). The World Bank has supported the central government in the Family Health Project based in the local municipalities to enhance safe delivery of babies and monitoring of the nutrition status of infants among the low income women in Brazil (P. 18). This arrangement should target both the urban and slum in order to strengthen the health system for economic development.

Policy choices also play a critical role in the prosperity of economy. In order to avoid placing the burden on the poor, the government provides a universal healthcare system, but allows those who are able to afford private healthcare to go for it (USA Int’l Business Publications, 2013, P. 32). The universal healthcare system in Brazil is non-exclusive, hence, can accommodate everyone, including foreigners. The problem with Brazil’s healthcare system is that 60% of all spending on healthcare is private, while that of the universal healthcare (SUS) accounts for only 3.1% of GDP (An injection of reality, 2011). Investment on healthcare ensures economic growth since a healthy workforce is more productive and delivers consistent production.

Foreign Aid Brazil

There are certain difficulties that have been encountered in healthcare financing in Brazil. This has resulted from low investment from the government. There is a wide social gap between the southern regions and the northern parts. The northeast region is the most affected with regards to healthcare, although there is need for the enhancement of healthcare across the nation. Inadequate healthcare providers in low populated areas are a common occurrence in the northeast region. Despite the situation in the north east region, Brazil does not depend much on foreign aid to improve its healthcare, but for servicing its debts. The British government still supports various projects in Brazil, despite the later being richer than Britain.

Brazil has made a significant step towards the eradication of HIV/AIDS across the country, surpassing the expectations of the World Bank. Based on the projections of the World Bank in 1990, Brazil was expected to have an estimated 1.2 million HIV+ people in 2000. However, this number was established to be only 630,000 in 2010 (Social Landscape, 2012, P. 65). This was attributed to the radical prevention measures put in place by the government for eradication of the menace. The World Bank gave Brazil a loan of US $67 million in 2010, to upscale prevention, care and treatment for those who are at risk of contracting HIV/AIDS. Besides, the organization has also supported the government of Brazil in enhancing the performance of the health program. The government has a responsibility of formulating a strategy for improving healthcare in all parts of the country.

Conclusion

International lending institutions have influenced Brazil’s economy both positively and negatively. Loans from these institutions helped the country in the implementation of a universal healthcare system. The country has not been able to solve its debt crisis even after their intervention. This has hindered Brazil from making proper investments in the health sector. Inequality in the provision of healthcare is still quite wider. The adherence to IMF conditions has impacted the reduction in government spending, wage cuts and increase in lending rates. Many people lost their jobs as a result of the decrease in public sector investment. The country’s currency went down against the world’s currencies. Change in governance has on the other hand, helped the country in taming its debts and improving the health sector. Effective implementation of the conditions of the MIF in the 21st century has ensured that the country is able to maintain a trade balance while also limiting importations.

 

References

An injection of reality (July 30, 2011). The Economist. Retrieved on 5 March 2013 from http://www.economist.com/node/21524879

Crocitti, J. J., & Vallance, M. (2012). Brazil today: An encyclopedia of life in the republic. Santa Barbara, Calif: ABC-CLIO.

Danaher, K. (2004). 10 reasons to abolish the IMF & World Bank. New York: Seven Stories Press.

Decision by Topic: Health and population (n.d). United Nations Sustainable Development Knowledge Platform. Retrieved on 5 March 2013 from http://sustainabledevelopment.un.org/index.php?menu=1251

Health and Development: Why investing in health is critical for achieving economic development goals (2004). Finance & Development. International Monetary Fund. Retrieved on 5 March 2013 from https://www.imf.org/external/pubs/ft/health/eng/hdwi/hdwi.pdf

Int’L, B. P. U. (2013). Brazil healthcare sector organization, management and payment systems handbook: Strategic. S.l.: Intl Business Pubns Usa.

Peet, R. (2003). Unholy trinity: The IMF, World Bank, and the World Trade Organization. London: Zed Books.

Social Landscape. (2012). Brazil Country Profile, 62-67.

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