Health as a Productive Sector: Integrating Health and Industrial Policy

Mackintosh, Maureen and Tibandebage, Paula (2016). Health as a Productive Sector: Integrating Health and Industrial Policy. Background papers for the Tanzania Human Development report 2017,No. 8; and ESRF Discussion Papers No.68; Economic and Social Research Foundation (ESRF), Dar es Salaam, Dar es Salaam, Tanzania.



Health care is often represented as a purely “social” sector, implying that health care expenditure is a burden on the economy. We argue in this paper that on the contrary, health care is economically productive, and that health care in Tanzania could be much more economically and socially productive if health policy and industrial policy were more closely integrated. Increasing the depth and breadth of domestic economic linkages between the health services and industrial and commercial suppliers within the Tanzanian economy can strengthen economic development while improving health care. The paper begins by defining what we mean in this paper by “health services”, “health care” and “health sector”. It then examines the economic size of health care (production and financing), the employment it generates, and its linkages to the wider economy through procurement and wholesaling. It demonstrates that the health sector, broadly defined, is economically important as a major service sector, a location of investment, a generator of employment and income, a sector of skilled training and employment, and a location for industrial growth.
The health of the health sector is very important for the health of the wider economy. The rest of the paper analyses the linkages between health care and manufacturing in Tanzania in more detail. It traces the declining share of local manufacturers of medicines and other health supplies in the expanding Tanzanian domestic market, quantifies the scale of this missed opportunity for industrial development to supply the needs of health care, and examines its causes. Finally, the paper looks at the scope for integrating health and industrial policy, arguing that reconstruction of these domestic economic linkages is both possible and desirable. Health policy strongly influences industrial development. Furthermore, the Tanzanian public health services suffer severely from shortages of essential supplies. We argue that it is possible for economic and social policy, working together, to strengthen and deepen economic ties within the economy, to the benefit of both the effectiveness of health services and public health, and manufacturing employment and development.

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