The Concept of Middle Income Countries through a Health Lens INNOVATION AND ACCESS TO MEDICAL TECHNOLOGIES 5 November 2014 David B Evans Director, Health Systems Governance and Financing World Health Organization, Geneva
Background 1. Low, middle and high income classifications linked to World Bank lending eligibility for IDA. 2. 2015 fiscal year I. low-income (34): GNI per capita (WB Atlas Method) $1,045 in 2013; II. Middle-income economies (105): $1,045 > GNI per capita < $12,746; (Lower-middle-income and upper-middle-income economies are separated at a GNI per capita of $4,125) III. High-income economies (75): GNI per capita $12,746. 3. 77 IDA-eligible countries; 59 IDA-only; and 18 blend countries. In addition, India is receiving transitional support
Country Income Classifications and Health 1. Since the financial crisis (2008), increasing demands from external financial partners in health for countries to become "selfsufficient" and prove "value for money" or "results".
Development Assistance Commitments (current $US billions) Source: OECD Nossal Forum, Melbourne, 22 October 2014
Country Income Classifications and Health 1. Since the financial crisis (2008), increasing demands from external financial partners in health for countries to become "self-sufficient" and prove "value for money" or "results". 2. Income per capita is featuring heavily in the idea that countries should raise more funds domestically and be "weaned" off external support 3. GAVI eligibility (53): GNI per capita $1570 4. Also requires co-funding of $0.20 per dose, rising linearly to full cost over time. 5. Global fund: based on income classifications, with modifications. Includes a 15% additional payment on evidence of "willingness to pay".
Income Classifications and Global Fund http://www.theglobalfund.org/en/fundingmodel/allocationprocess "Overview of the allocation methodology: 2014-16". Accessed 4 Nov 2014:
Capacity to Pay for Health and Income Classifications
Total health expenditure (THE) per capita (2012) and GNI per capita (log scale) 1800 1600 1400 THE per capita $ 1200 1000 800 600 Low income Middle income 400 200 0 5 6 7 8 9 10 GNI per capita (WB Atlas method), log Sources: THE WHO Global Health Expenditure Database GNI per capita WB, World Development Indicators
Total health expenditure (minus external resources) per capita vs. GNI per capita 1800 1600 THE minus external resources, per capita 1400 1200 1000 800 600 400 Low income Middle income 200 0 5 6 7 8 9 10 GNI per capita (WB Atlas method), log Sources: Health expenditure WHO Global Health Expenditure Database GNI per capita WB, World Development Indicators
What would happen if donors withdrew aid? THE minus external resources, per capita External resources for health, per capita % increase of domestic resources if donors withdrew aid 250% 200% 150% 100% 50% 0% 1800 1600 1400 1200 1000 800 600 400 200 0 Malawi Central African Republic Niger Madagascar Ethiopia Uganda Guinea-Bissau Mozambique Tanzania Mali Afghanistan Benin Comoros Kenya Tajikistan Mauritania South Sudan Kyrgyz Republic Yemen, Rep. Cote d'ivoire Sao Tome and Principe Lesotho Solomon Islands Ghana Uzbekistan Honduras Bhutan Kiribati Nigeria Vanuatu Philippines Samoa Georgia Timor-Leste El Salvador Mongolia Ukraine Marshall Islands Fiji Belize Bosnia and Herzegovina Jordan Jamaica Ecuador Dominican Republic Iran, Islamic Rep. Peru Tuvalu Dominica St. Lucia Montenegro Grenada Botswana Costa Rica Mexico Panama Palau Brazil Source: WHO internal calculations
GNI per capita growth (annual %), 2003-2012 10 8 6 4 2 High income Middle income Low income 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-2 -4-6 Source: World Bank, World Development Indicators
Trends: Government Commitment to Health (un-weighted average) General government expenditure on health % General government expenditure (GGE) 2007 2008 2009 2010 2011 2012 AFR 10.7 10.2 10.4 10.6 10.5 10.5 AMR 12.5 13.0 13.6 13.8 13.7 13.6 EMR 7.3 7.3 8.2 8.0 7.9 8.2 EUR 13.0 12.8 13.0 13.1 12.8 12.8 SEAR 8.9 8.8 8.7 7.9 8.1 7.5 WPR 13.3 12.9 12.7 12.6 12.7 12.7 Source: WHO, Global Health Expenditure Database, www.who.int/nha
Share of Government Expenditure in GNI 90% 45000 80% 40000 70% 35000 60% 30000 50% 25000 40% 20000 gge_gdp gge_pc 30% 15000 20% 10000 10% 5000 0% 0 Bangladesh Ethiopia Mali Madagascar Nepal Congo, Dem. Rep. Liberia Afghanistan Guinea Tanzania Rwanda Burkina Faso Togo Kenya Eritrea Malawi Turkmenistan Sudan Philippines Iran, Islamic Rep. Mexico Pakistan Kazakhstan Vanuatu Armenia Cote d'ivoire South Sudan Zambia El Salvador Colombia Suriname Nigeria Senegal Belarus Ghana Papua New Guinea Tunisia Georgia Lebanon Guyana Egypt, Arab Rep. Cabo Verde Jordan Romania Kyrgyz Republic Bulgaria Congo, Rep. Honduras Botswana Yemen, Rep. Angola Paraguay Moldova Ecuador Mauritania Bosnia and Herzegovina Bolivia Libya Sao Tome and Principe Bhutan Montenegro Serbia Marshall Islands Lesotho Cuba Tuvalu United Arab Emirates Antigua and Barbuda Chile Bahrain St. Kitts and Nevis Qatar Brunei Darussalam Saudi Arabia Lithuania Kuwait Slovak Republic Latvia United States New Zealand Poland Luxembourg San Marino Czech Republic Malta Cyprus Spain United Kingdom Netherlands Austria Greece Finland Denmark Source: World Bank World Development Indicators
Under-five mortality rate vs. GNI per capita, 2013 180 160 140 Under-five mortality rate (per 1,000 live births) 120 100 80 60 40 Low income Middle income 20 0 5 6 7 8 9 10 GNI per capita (Atlas method), log Sources: under-5 mortality: WHO GNI WB World Development Indicators
Least Developed Countries A country is classified as a Least Developed Country if it meets three criteria (48 in 2014): Poverty (adjustable criterion: three-year average GNI per capita of less than US $992, which must exceed $1,190 to leave the list as of 2012) Human resource weakness (based on indicators of nutrition, health, education and adult literacy) and Economic vulnerability (based on instability of agricultural production, instability of exports of goods and services, economic importance of non-traditional activities, merchandise export concentration, handicap of economic smallness, and the percentage of population displaced by natural disasters)
Conclusion Becoming middle income does not necessarily mean greater spending on health or capacity to spend A number of countries would find it impossible to replace instantaneously the current external funding they receive for health if all donors decide to use the WB classifications for providing funding for health A continuous index perhaps broader than the HDI to allow a slow phase out of external assistance would be a lot more preferable to ensure affordability of health and health products