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Economies eyeing rapid privatization at higher risk: study

Economies eyeing rapid privatization at higher risk: study
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First Published: Thu, Jan 22 2009. 10 34 PM IST
Updated: Thu, Jan 22 2009. 10 34 PM IST
New Delhi: Economies that adopt rapid mass privatization of state-run enterprises may inherit a significant male mortality rate ranging from 8%-12%, says a study that has already triggered a sharp rebuttal from some experts.
Though the study, to be published in the forthcoming issue of the international medical journal Lancet, relies on male mortality data from some East European countries and former Soviet republics, the authors warn that the research holds lessons for India, which launched economic reforms about 18 years ago.
The top five countries on the list—Russia, Kazakhstan, Estonia, Latvia and Lithuania—that rapidly privatized their enterprises saw unemployment triple and mortality rates rise by as much as 42%, said the Lancet report published online on 15 January.
Countries that transitioned gradually—Albania, Croatia, the Czech Republic, Poland and Slovenia—posted a decrease in mortality rates by 10% and saw only a 2% rise in unemployment.
The key factor that accelerated mortality rates was unemployment, followed by stress, a decrease in the quality of health care (which had previously been provided by workplaces), rising social inequalities, social disorganization and increased corruption.
While previous studies have theorised about links between the nature of a country’s economy (capitalist or communist) and its effect on the populations’ health, Martin Mckee, co-author of the Lancet research said this is the first time there’s an empirical basis. “We’ve put numbers and for the first time linked mass privatization to mortality rates in these regions.”
However, Jeffrey Sachs, professor at Columbia University and one of the architects of the economic reforms initiated by Russia, has challenged the claims set out by the researchers. In a letter published in the online edition of the Financial Times on 19 January, Sachs says, “The paper in question is a confused polemic that will not withstand serious epidemiological scrutiny.”
According to him, life expectancy had been falling from the 1960s, prior to the transition, and worsened after “a collapse of a Russian-led empire, mass corruption, and chaotic political and economic conditions”.
Although fast developing economies such as India, in the 18th year of its economic reforms programme and China were not studied, Mckee, who is a professor at the London School of Hygiene and Tropical Medicine, said they would be better off adopting a gradual pace of privatization.
“The implications of this study are clear for countries such as China and India, which are starting to privatize large, state-owned sectors. The countries which phased in the changes gradually, and developed appropriate institutions aimed at helping workers to adjust, did not see these huge rises in male deaths,” he said.
According to the latest statistics from the World Health Organization, India had an overall male mortality rate of 27.5%, significantly lower than those of the worst-performing European countries measured.
However there’s a growing wealth of analysis suggesting a spurt in so-called lifestyle diseases, such as cardiovascular ailments and type-2 diabetes that are associated with increased carbohydrate intake—essentially a lack of proper nutrition.
“There are no systematic studies, to my knowledge, on the impact of privatization on mortality in India,” said Rajat Kathuria, a researcher at the Indian Council for Research on International Economic Relations. “However, privatisation has been rather slow in India. Montek Singh Ahluwalia (deputy chairman, Planning Commission) authored a recent paper on the pace of privatization in India and emphasized that India was following a so-called gradualism approach. So in that sense, it’s unlikely that we would see that kind of spurt in mortality in India due to privatization.”
But though absolute poverty showed a decreasing trend, there was a marked rise in inequality among social classes, said Kathuria, and if that was one of the factors responsible for a high mortality rate, India should be wary, he added.
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First Published: Thu, Jan 22 2009. 10 34 PM IST