Health Effects of Market-Based Reforms in Developing Countries

Radical and simultaneous economic reforms were implemented in many developing countries, especially in Africa, Asia and Latin America in the 1980s and early 1990s. Many of these reforms - structural adjustment programmes - were implemented with advice and support from Bretton Woods' institutions. The reforms were intended to strengthen weak economies, and have spawned a large and sharply divided literature as to their distributional and efficiency effects. The paper uses cross-country regression analysis to assess health effects of structural adjustment reforms in developing countries over the period 1980-93, controlling for effectiveness in their implementation. The main finding is that countries which effectively implemented market-based reforms had better health outcomes at the end of the adjustment period than poor adjusters or countries not affected by these reforms. The paper contends that differences in institutional and administrative capacities across countries account for success or failure in reform implementation. Since in general, the nature and magnitude of the effect of any reform depend on how well it is implemented by policy-makers, I argue for strengthening of public service institutions in poor countries before the undertaking of development reforms.