Thursday, September 27, 2007

Comparing Two Neighbors: Panama and Colombia (Part II)


All this data explains very well why Panama is doing well in the global economy, but it does not explain how Colombia could be doing, ostensibly, so poorly. Why does Colombia have nearly the same GDP per capita, yet spend significantly less per capita on health services? By way of explanation, we take every scenario in which Panama is thought to excel, and compare this to Colombian policies.

1) Colombia is an industrial and agriculturally-based economy.

For example, Colombia is not a service-based economy. Its main exports are manufactured goods such as petroleum, coal, and surprisingly, pop-up books. The Colombian economy is largely in the process of developing legal exports like coffee instead of cocaine. After recovering from a large recession in 1999, the focus is on rebuilding the economy through crop substation policies and this leaves less money to spent on health services.

2) Differences in the methodology of calculating GDP.

The GDP of Colombia is also adjusted for illegal crop production, to give a better sense of all the economic activity within the borders. Illegal producers are not subject, however, to the same governmental regulations and services, leaving many self-employed citizens out of programs directed towards health services. Social Insurance programs, for example. GDP increases due to anti-crop programs like Plan Colombia also work to offset GDP in a way that would make it appear disproportionate to average health expenditures in other countries of the same GDP per capita. Panama, by contrast, receives no such aid.

3) Migration, Stability and Location.

It is also worth saying that Colombia, while it does not share the Panamanian Canal, does indeed benefit quite a bit from its location which is bordering Panama. But retirees are not fleeing to Colombia. A country in which government corruption is a large problem, and where rebel forces like the FARC and the paramilitaries control certain provinces, is not attractive for American retirees who would likely spend much more on health services than a younger, native population.

The data here is not conclusive. Looking at the graph alone would give the impression that there is much more proactive health care planning in Panama than in Colombia. Colombia has the social security and health care infrastructure in place, yet at the moment its priorities are in line with a program to end the production of illegal drugs. While it certainly provides evidence that a growing economy like Panama can indeed provide the conditions for a healthy human population, in cases like Colombia, where the economy is also growing quite well, political problems and instabilities get in the way of affective health services, and their public or private consumption.

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