Direct evidence of the cost of strategies designed to
cope with the risk of malaria is difficult to obtain, because they tend to apply to all households in a region. However, behavior such as maintaining a labor surplus to cope with illness in individuals can significantly reduce overall productivity.
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Macroeconomic impact
A recent study suggests that the economies of countries with a large amount of malaria grew by 1.3% less per annum
compared to unaffected countries in the period 1965–1990,
resulting in an income level 33% lower than that of coun-
tries without malaria. A 10% reduction in malaria was associated with a 0.3% increase in annual growth.
Although others have found a quantitatively smaller
effect, the result is still clear: In 1995, income levels in countries with endemic malaria were substantially lower than
those without the disease.
Alleviation strategy
Good evidence on effectiveness is available only for indi-
vidual interventions, not for a package, so this evaluation takes a package of measures that maximizes the number of people covered and minimizes overlap in order to
avoid overestimation of benefits. The package includes use of insecticide-treated mosquito nets for children, a two-stage treatment of pregnant women in their first pregnancy.
and a switch to a more effective drug combination for treatment of sufferers (with better coverage of those affected).
This was evaluated for SSA, which carries by far the greatest burden of malaria.
Economic evaluation
Using macroeconomic data, the benefit-cost ratio was cal-
culated for halving the malaria burden in sub-Saharan
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How to Spend $50 Billion to Make the World a Better Place Africa by 2015 (a target of the United Nations Millennium
Project). The costs of reaching this goal are estimated at Int $21 per person per year. For the more than half a billion
people at risk, the total cost would be Int $140 billion over the period 2002–2015. The benefits depend on which of two
published models is used, but these lie between Int $275
billion and $660 billion over the same period. This gives
a benefit-cost ratio of 1.9 or 4.7, and these ratios remain favorable even when assumptions of higher costs and discount rates are used.
The proposed intervention can also be assessed from a
microeconomic standpoint. Considering each of the three
components of the program for sub-Saharan Africa individ-
ually, over the Millennium Project timescale 2002–15:
r An increase in use of insecticide-treated mosquito nets
by under-5s in SSA from the present estimated 2% to
70% would provide a benefit of nearly Int $18 billion
annually, at a cost of Int $1.77 billion: a benefit-cost
ratio of 10. An additional 60 million children would be
protected in areas where malaria is endemic.
r Providing two-stage anti-malarial treatment to 90% of
women in their first pregnancy would protect nearly
5 million mothers and their newborn infants annually.
Over 2002–15, this would cost less than Int $0.5 billion
and deliver benefits valued at Int $6.2 billion, an overall benefit-cost ratio of 12.1.
r Changing to the preferred artimisinin-based combina-
tion therapy (ACT) for malaria treatment (combined
with dipstick screening to ensure treatment only of true
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Table 2.1. Effects of HIV/AIDS on national GDP, 2000–2025
2000 GDP
(%) loss
Monetary loss
($m)
no intervention
($ m)
Algeria
186,900
36.20
67,658
Egypt
222,190
44.30
98,430
Iran
364,400
33.60
122,438
Jordan
18,684
27.90
5,213
Lebanon
17,950
26.30
4,721
Morocco
97,991
33.20
32,533
Tunisia
58,574
45.50
26,651
Yemen
13,954
31.40
4,382
Source: Calculated from Robalino, Jenkins and El Maroufi (2002).
malaria cases) for the 168 million people who are cur-
rently treated with less effective drugs would be highly
beneficial. The benefit-cost ratio would be 38.6, with
costs of Int $6.5 billion delivering benefits of Int $251 billion over the 2002–15 period. However, to meet the goal
of halving malaria incidence, an additional 112 million
cases would need to be treated each year. The incremen-
tal costs for this would be higher (Int $8.2 billion) but
this treatment would deliver additional benefits of Int
$158 billion, giving a benefit–cost ratio of 19.1.
Combining all these interventions, at an annual cost of just under Int $3 billion, would deliver some Int $50 billion in annual benefits over the Millennium Project timescale.
Control of HIV/AIDS
Although a global problem, more than 90% of HIV infec-
tions occur in developing countries. AIDS is responsible for
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How to Spend $50 Billion to Make the World a Better Place over 5% of all deaths worldwide, accounting for between 2.5
and 3.5 million deaths in 2003. 5.3 million new infections occur each year. The generalized stage of the epidemic, with more than 5% of the population affected, has been reached
in southern and eastern Africa, together with a few West
African countries.
Microeconomic impact
Unlike malaria, HIV/AIDS can affect all strata of society
equally. The impact at household level can be measured in
terms of the cost of adult deaths, but there are numerous
other effects in subsistence economies, including reduction in quality and quantity of farm labor, withdrawal of children from school, and direct financial impact of payment for
medical costs and funeral expenses.
Households can be surprisingly resilient because of the
coping strategies they often adopt. However, such strategies may include selling assets, contributing to a downward welfare spiral. For example, in Thailand 41% of families with an AIDS death sold land, and 60% of Ugandans sold property
to pay for care costs.
Macroeconomic impact
There is no agreement on the true macroeconomic effects of HIV/AIDS. It was originally thought that mortality had little direct effect on the economy in countries where there was an existing high lev
el of unemployment. More recently, it has been argued that there is a strong negative impact on GDP.
In addition to losses of labor, survivors are less productive because of the need to care for sick relatives. There is a
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particularly worrying effect in the education sector: A loss of teachers and the transfer of scarce funds to health services reduce future growth prospects. In Zambia, for example,
more teachers die than can be replaced through existing
training facilities.
In North Africa, it is estimated that economic growth
equivalent to 35% of today’s GDP would be forfeited by 2025
compared to a situation where HIV/AIDS was not present.
For sub-Saharan Africa, estimates of annual GDP loss per
capita in individual countries range from 1.2% for Mozam-
bique to 3.2% for Botswana.
Alleviation of the challenge
For full effectiveness, measures must target both preven-
tion and treatment. However, this analysis looks primarily at prevention, given the rapid changes in drug prices and
the lack of clear data on treatment outcome that make cal-
culating the cost-benefit ratio of treatment difficult.
In countries with nascent epidemics, measures would
clearly focus on preventive measures among high risk
groups. As the epidemic grows within these groups, treat-
ment of sufferers must be added. As a generalized epidemic develops, this package of measures must be implemented
on a wider scale. Such interventions may have positive side effects in terms of reduced levels of other sexually transmitted diseases and overall better health education.
Economic evaluation
For North Africa, where the epidemic is still nascent, relatively modest interventions such as increasing condom
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How to Spend $50 Billion to Make the World a Better Place use by 30% and increasing access to safe needles for intravenous drug users by 20% could reduce GDP loss by 20%
by 2025. However, a delay of even a few years would make
this approach considerably less effective.
Figures from Thailand demonstrate the effectiveness of
this strategy where disease prevalence in the at-risk groups is high. A policy of 100% condom use in the sex industry is estimated to have averted 200,000 infections between 1993
and 2000, at a cost of Int $1.7 billion. The net benefit is nearly Int $25 billion: a benefit-cost ratio of 14.9.
In SSA, where infection rates are high, a range of indi-
vidual interventions all have high benefit-cost ratios. Such measures can also be integrated with delivery of other
healthcare programs, for instance, for tuberculosis, to give even greater benefits.
Lastly, a program of integrated measures for low- and
middle-income countries was evaluated on the basis that,
without intervention, over 45 million new infections would occur between 2002 and 2010. It was estimated that 63% of
these cases could be averted, giving a benefit of nearly Int $3 trillion over this period. Total costs were estimated to be Int $59 billion, a benefit-cost ratio of about 50. Sufficient funds would be available if OECD countries donated 0.04%
of their Gross National Income.
Strengthening basic health services
Providing a proper infrastructure of primary healthcare has been estimated to address 90% of total medical demands.
It has been argued that this is the least costly and most
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effective way to address global health problems. There is
evidence for links between total healthcare expenditure and welfare of particular population groups. More specifically, the World Bank’s 1993 World Development Report identified a minimum package of measures. This includes com-
prehensive immunization, a range of public health pro-
grams, and clinical care in pregnancy, for sick children, and in other specific circumstances. Such services would help
to meet the health-related Millennium Development Goals,
themselves vital if goals in other areas are to be met.
Increasing public spending on health in a group of poor
countries from 2% of GDP in 1999 to 15% in 2015 was cal-
culated to cost an additional Int $225 billion. However, it would yield benefits of Int $874 billion to children under five, giving a benefit-cost ratio of nearly 4, with additional benefits for people of other ages, (although the benefit-cost ratio depends crucially on the assumptions made on trends
in baseline mortality).
Providing the World Bank-recommended package of
interventions to the nearly one billion people in low- and middle-income countries would cost Int $337 billion annually, but would deliver Int $871 billion in benefits, a benefit-cost ratio of 2.6.
This approach may be more difficult to implement than
those which are disease-specific. This partly is a reflection of greater international willingness to finance more focused initiatives, and partly the difficulty in effectively delivering improved general health services to the very poor. However, effective treatment over the long term of diseases such as malaria and AIDS requires adequate infrastructure, so there
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How to Spend $50 Billion to Make the World a Better Place is the opportunity to ensure a wider range of benefits by
strengthening basic health services.
Establishing effective health services is not simply a
funding task. Aid must be targeted appropriately and spent wisely to deliver the benefits. Some studies, for example, have shown no significant relationship between pub-
lic spending and child mortality. Such failings are generally policy-related and have their origin in problems such as
poor targeting of resources, too little funding reaching local service providers, or too few trained staff. This does not mean the investment should not be made, merely that the
difficulties must be appreciated and tackled.
Discussion and conclusions
Estimates suggest that many interventions to improve
health care would be highly beneficial to low- and middle-
income countries, and evidence from real-world programs
shows that benefits are likely to outstrip costs substantially.
There are real difficulties – both political and financial –
in ensuring successful control of communicable diseases in developing countries. However, the benefits to human welfare are matched by the large economic gains, and we surely should see action in this area as a high priority.
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COMMUNICABLE DISEASES
OPPONENTS’ VIEWS
In their challenge paper, Anne Mills and Sam Shillcutt
make a compelling case for strong international e
fforts to tackle the problem of communicable disease. Their opponents have now made further significant contributions to
the debate: Jacques van der Gaag argues for some more
radical thinking in the area, and David Evans looks more at the detailed reasoning behind the proposals.
Van der Gaag argues that effectively meeting the chal-
lenge requires more than putting money into conventional
schemes, often based on best-case data from controlled
experiments. Putting them into effect on a large scale is
often far more difficult and rarely delivers the same benefits. When it comes to delivery methods, donors are often
content with the status quo, and governments may lack the
political will to take proper action.
In the case of malaria, he fully agrees with the need
to tackle the disease and the benefits of doing so. How-
ever, although cost effective interventions exist theoretically, in practice delivery mechanisms are woefully inadequate.
Despite occasional success stories, as in KwaZulu Natal,
the international Roll Back Malaria program has succeeded
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How to Spend $50 Billion to Make the World a Better Place only in doubling expenditures with little impact on the burden of disease. One reason for this may be the complete
reliance on public healthcare infrastructure.
HIV/AIDS is arguably an even greater problem, with
15,000 new cases each week and little progress being made
to treat the approximately 40 million existing cases. Recent models predict economic collapse in badly affected countries unless immediate and far-reaching action is taken. Van der Gaag believes that the challenge paper does not go far enough in its proposals: For example, aggressive programs
to prevent further infection can be effective (for example, as in Thailand), but the authors make no mention of the need
for treatment for those already with the disease.
The problem, he argues, is that governments have gen-
erally failed to provide the basic health service infrastructure necessary for the AIDS epidemic to be treated. In
sub-Saharan Africa, three-quarters of the people receiving treatment rely on the private sector. However, international donors will not provide funds to the private sector. If donors are willing to give billions of dollars, but governments cannot spend it effectively, surely all other channels, including the private sector, should be considered. This probably means that costs will increase, but currently money is not being spent wisely.
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