rural-urban dynamics_report.pdf - Khazar University

GLOBAL MONITORING REPORT 2013 RURAL-URBAN DISPARITIES AND DYNAMICS 119
Annex 2A.1 Equalization of health service delivery
and its expected impacts on the MDGs: A simulation
exercise
Closing the rural-urban MDG and service
gaps may represent a major challenge for
many countries, especially if these gaps are
large and the unit costs of services for rural
populations are higher than for their urban
compatriots. In the simulation exercise presented
in this annex, the broader economic
consequences of closing health gaps in lowincome
countries are explored by adapting
MAMS, a CGE model for country strategy
analysis, to address rural-urban aspects of
MDGs. The database used was designed to
capture characteristics typical of low-income
countries, including their MDG outcomes,
sectoral shares in value-added.
The base simulation assumes an annual
growth rate of 5.6 percent, following the
trend of low-income countries since 2000;
and “business as usual” in government policies
and spending, including borrowing that
is consistent with debt sustainability. In
the comparator simulations, for the period
2014–30, it is assumed that the government
gradually scales up its health services, either
by closing the gap in the levels of per capita
health services reaching rural and urban residents,
or by closing the rural-urban gap in the
under-five mortality rate (U5MR), the outcome
indicator of interest here. These efforts
are undertaken using alternative sources for
required additional financing (foreign grant
aid, domestic borrowing, taxes, and reduced
spending on infrastructure).
Under the base scenario, the major macroeconomic
indicators (GDP, government
and private consumption, and investment)
all grow at annual rates of around 5 percent;
in per capita terms, household consumption
grows at an annual rate of around 3.1
percent, with a slightly more rapid rate for
rural households (3.2 versus 3.0 percent). As
shown in figure 2A.1, significant progress
is realized for both poverty and the U5MR,
while the rural-urban gaps narrow but still
remain substantial.
In the first simulation (denoted mdg4u+fg),
the government gradually raises per capita
rural health services to the urban level while
maintaining a growth rate for urban services
that is sufficient to maintain the same reduction
in the urban U5MR as under the base;
in other words, the improvement in the rural
population does not come at the expense of
the health outcome of the urban population;
additional foreign grant aid provides needed
financing. As shown in figure 2A.2, this set
of actions reduces the 2030 rural U5MR by
slightly more than 5 points, closing roughly
half of the rural-urban gap. Both rural and
urban poverty rates are virtually unchanged.
At the macro level, growth in government
consumption increases by 0.6 percentage
points (Figure 2A.3), accompanied by a similar
increase for government investment, with
the increases directed to the health sector
and financed by foreign grant aid; by 2030,
FIGURE 2A.1
Percent
100
90
80
70
60
50
40
30
20
10
0
Source: Lofgren 2013.
Poverty and under-5 mortality for base simulation
2013 2015 2017 2019 2021 2023 2025 2027 2029
Under-5 mortality rate, rural
Under-5 mortality rate, urban
Poverty rate, rural
Poverty rate, urban