Enlarging Markets

The BRICS are getting heavier

April 9, 2013
April 9, 2013

In China, the growth rate of new Kentucky Fried Chicken restaurants is 13 percent a year, compared with 2.9 percent in the U.S. And as the chain has expanded, so have Chinese citizens’ waistlines. Recently, the aspiring BRICS nations (Brazil, Russia, India, China, and South Africa) met in sunny Durban, South Africa, for their fifth summit to discuss their plans for creating their proposed BRICS Development Bank (BDB). Despite ongoing doubts that these nations will be able to quickly come to an agreement over where and how the bank will function, there is hope that these differences can be overcome.

But there is one issue that the BRICS leaders seemed to have overlooked. That is, how will the BRICS bank address these nations’ ongoing struggle to contain the spread of disease? Diseases commonly attributed to economic wealth and prosperity, such as obesity and diabetes, are on the rise and will inevitably threaten their bristling economies should the BDB fail to adequately invest in healthcare infrastructure.

The proposed BDB bank is mainly focused on providing loans and grants – approximately $4.5 trillion in total – to finance infrastructural development projects in the BRICS and other developing nations. This funding will be used to construct railroads, bridges, highways, and ports. Created as an alternative “Bretton Woods for the developing nations,” loans will be provided at favorable lending terms. The bank will also provide a currency reserve of $100 billiondollars to be used in times of economic crisis. Another implicit goal through this banking endeavor is to decrease the BRICS and other developing nations’ ongoing reliance on the World Bank and IMF for financial assistance while creating a lending facility that better understands developing nations’ context and needs.

Unfortunately, however, at the fifth summit the BRICS failed to come to terms on how and when the BDB will be established. Differences over how much these nations will contribute to the bank’s initial deposit; disagreements over who will lead the BDB – with China striving to take control though greater financial contributions ; differences in domestic political structures, cultures, and foreign policy views; as well as contestation over where the BDB will open shop has concerned many that it may take time for bank operations to begin.

But these nations share a deeper historical interest that may help to overcome these differences. Since the early-20th century, political leaders in all of these nations have aspired to engage in international cooperation, both for the establishment of peace but also for the creation of multilateral institutions, such as the United Nations and the World Health Organization. Through these endeavors and others, the BRICS found common ground in striving to increase their international reputation as nations that mattered in the world; as nations that could make a difference.

The BRICS leaders see the BDB as an opportunity to achieve these foreign policy objectives. President Vladimir Putin of Russia has viewed the BDB as a key “cooperative mechanism” in helping transform the old system of international finance and to bolster the emerging nation’s influence in this realm. All of the BRICS leaders also agree that the BDB will help to magnify their voice within key multilateral lending agencies, such as the World Bank and the International Monetary Fund .

While these geopolitical incentives may help to facilitate agreements to finalize the BDB, and while their certainly is wide-spread agreement that the endeavor can strengthen infrastructural investment and economic growth, one key issue seems to have been overlooked: Health.

Indeed, the BRICS are grappling with serious public health issues that, if not effectively addressed, could jeopradize their economies. In addition to the ongoing challenge of HIV/AIDS, TB, and a myriad of other communicable diseases, two non-communicable diseases stand out as possessing potentially disastrous economic consequences: Obesity and diabetes.

Screen Shot 2013-04-08 at 4.38.42 PM.png

Increased foreign direct investment, the arrival of fast food restaurants, and increasingly sedentary lifestyles, as the graphs here illustrate, have caused obesity and diabetes cases to rapidly increase in Brazil, India, and China (though to a lesser extent in Russia and South Africa, where malnourishment seems to be more prevalent). In Brazil, by the mid-2000s, the number of obese individuals has increased from 11.4 percent of the population in 2006 to 15.8 percent in 2011. And by 1998, 4.9 million adults had diabetes, with a projected increase to 11.6 million by 2025 . For a nation experiencing ongoing poverty and malnourishment, the rise of these silent but deadly diseases is alarming.

But this situation is even more alarming in India and China. In 1980, China had approximately 1 percent of the population living with Type 2 diabetes, but that rose to 10 percent by 2008. And in 1992, 30 million people were reportedly obese, increasing to approximately 90 million by 2008 . In India, in 2004 there were 37.6 million diabetes cases, increasing to 41 million in 2007, with a projected increase to 80.9 million by 2030 . Obesity cases have also burgeoned from 9.2 percent in New Delhi, 3.8 percent in Kerela, and 4.4 percent in Gujurat.

Screen Shot 2013-04-08 at 4.41.01 PM.png

But perhaps even more daunting are the projected economic costs associated with obesity and diabetes. For example, if China were to provide insulin and oral medications – such as metformin and glibenclamide – to its diabetic population at one-third of the total U.S. per patient annual costs, and if only 25 percent of China’s total 92.4 million diabetes cases were treated, total annual costs would be approximately $46 billion per year roughly half of China’s 2011 military defense budget . India also faces exorbitant costs, with $2.2 billion in total diabetic drug andtreatment costs on average. Both of these nations also face high indirect costs from obesity and diabetes, such as days lost at work and corporate expenditures for healthcare.

chart334289890234890234.png

Considering these dire economic projections, the BDB should plan to invest in healthcare infrastructure. While Brazil, India, and China have begun to implement policies geared towards monitoring obesity and diabetes cases, little has been done to invest in what the BDB sees as a priority: infrastructure — such as human resources and facilities.

All of the BRICS nations are in fact experiencing a dearth of primary healthcare doctors and nurses. There is also a large shortage of beds, x-ray machines, and other medical devices needed to prevent, closely monitor and treat these diseases. This lack of healthcare infrastructure is mainly concentrated in the rural, hard to reach areas, where obesity and diabetic cases are gradually beginning to emerge.

But if the proposed BDB and the BRICS are to achieve their goals of unparalleled economic growth and prosperity, investments in healthcare infrastructure must become a priority . Crafters of the BDB governing rules have overlooked the fact that sound healthcare infrastructure is necessary in order to safeguard and nurture a healthy, highly productive workforce.

Unfortunately, however, while the BRICS have certainly acknowledged that combating diseases is important, the notion of promoting “wealth in health” through lending for healthcare does not seem to be a priority.

This originally appeared on The Atlantic. Also on our sister site:

Top News

Powered by WordPress.com VIP
Follow

Get every new post delivered to your Inbox.

Join 23,822 other followers