The Physics arXiv Blog had an interesting story, "Poverty Escape Plan Revealed by Computer Model of Economic Vicious Cycles". Georg Goerg a PhD student at Carnegie Mellon University has developed a model that shows how disease spreads through a country and the resultant effect on that economy. The basic assumptions is that disease debilitates people to the point where they cannot work or they work less days, resulting in less economic output for the country and poorer individuals. As the economy shrinks there are less healthcare resources available, which leads to more sick, poor workers in a vicious downward spiral of less healthcare, less economic output and more poverty.
Goerg's model tested two curative scenarios:
- A large injection of outside capital
- "the country increases the proportion of GDP it spends on healthcare, to bootstrap its own way out of the cycle"
Goerg's "conclusion is that increasing the proportion of GDP spent on healthcare cannot release a country from this kind of poverty trap. Indeed, it can do the opposite and trigger a vicious cycle of decline." Effectively, a poor country cannot deal effectively with a health emergency, such as an epidemic, using its own resources. The likely outcome will be a marked decline over a long period in GDP which will reduce healthcare for a long period.
The preferred approach to address healthcare in poor countries, as shown by the model, is to seek out a large amount of foreign capital. Alternatives might include:
- Development aid
- Sale of minerals (Saudi Arabia)
- Sale of future mineral deliveries (Venezuela)
- Organizing large pools of private capital for "public good" (Israel, Chile)
Regardless of how the pool of capital is put together, it is not necessarily the case that a healthcare program has to be administered by a national government (even if they raised the capital).