The Impact of Globalization on the Health Sector in South Africa

Topics: Health economics, Medicine, AIDS Pages: 11 (3218 words) Published: December 30, 2013
The Impact of Globalization on the Health Sector in South Africa

After the Apartheid era, massive inequalities in income, health status, access to health care and other social services continued to dominate in South Africa. The Apartheid era was a system of racial segregation that was implemented in South Africa from 1948 to 1994. Due to colonization, whites had ruled South Africa for several centuries, which resulted in the creation of a system that was constructed to serve as a legal framework for continued economic and political dominance by people of European descent (WHO 2003: Antiretroviral Therapy). The apartheid era came to an end as a consequence of both inner and global pressure and South Africa’s new democratic government. The new government claims that improving the access to health care is a main priority noting, “emphasis should be placed on reaching … the most vulnerable” (Department of Health 1997:13). Giving access to health care is becoming an even greater challenge. South Africa was, and is still facing an exploding HIV/AIDS epidemic that, if anything, is highly associated with health care demands. Today, there are more than 5.3 million people living with HIV/AIDS in South Africa, this accounts for more than 21.5% of the entire population (CIA World Fact book: 2006). This paper aims to understand how the health care sector has dealt with the challenges faced in dealing with immense inequalities and a growing epidemic in the context of globalization. Furthermore, it will become evident that South Africa has, in some ways, addressed these challenges effectively but these challenges are facing a great developmental trap. Therefore, simple strategies that could offer potential benefits to South Africa in light of these challenges will be examined.

For the sake of clarity, globalization will be defined as the “process of increasing economic, political and social interdependence and global integration that takes place as capital, traded goods, persons, concepts, images, ideas and values diffuse across state boundaries” (Hurrell and Woods 1995:447). Globalization will also be understood as the “opening and deregulation of economic activities- the removal of tariff barriers to trade, of restrictions on investment and capital flows” (Mayor, Nell 4). It is first important to understand the different domestic actors on the health sector in South Africa in order to comprehend how the health care system operates and how globalization plays a pivotal role in the actions of these actors.

There are three distinct actors that have direct economic and political influence in regards to health in South Africa. The first actor that will be examined is the National Treasury. The National Treasury is responsible for setting the macroeconomic agenda and controlling the government budget. In 1996, the ministry introduced the GEAR (Growth Employment and Redistribution) policy. GEAR is the promotion of business confidence and it is aimed to catalyze foreign investment. GEAR imposes constraints on the resources flowing into the health sector because it requires the public expenditure growth to be lower than overall economic growth in order to show fiscal competence. Fiscal competence will, in turn, generate more foreign investment because other countries will perceive South Africa as an efficient and effective economy that will be able to generate capital. Thus, the government’s macroeconomic strategy is interdependent on investor and market sentiment and imposes a constraint on the freedom of action of the National Treasury. It is the role of the national Treasury to exercise coordination of the budget process and determine general resource allocations across different spheres of government and in the providences. Because the Treasury is in charge of financial allocations, it has important connotations on available finance for health care. Taking these external Actors into account, it is evident that they play an important...

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