Trade Liberalization The Health Impacts On Developing Countries Economics Essay

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Nowadays, international trade liberalization has been becoming more and more important for all countries around the world. At the same time, there has also been an increasing concern over negative social and environmental impacts of trade liberalization particularly for developing countries. Even though World Trade Organization has always kept saying and promoting free trade as 'a vital means to alleviate poverty and faster the economic growth' of the poor countries (WTO 2000), more and more evidences on failure rather than success stories on poverty alleviation have been witnessed in many developing countries. Hence, it is utmost important to examine the consequences of trade liberalization for those poor countries and, only by then, we can really help the development of poor countries.

Accordingly, there are many scholars who have researched on the negative consequences of trade liberalization on developing countries, but not many researchers are paying attention to negative health consequences of trade liberalization on developing countries. In fact, trade liberalization has a variety of negative consequences on those poor countries and these impacts can be differentiated into direct and indirect impacts. Health impacts can be categorized into indirect impacts of trade liberalizations and this paper will examine how trade liberalization affects the mental and physical health statuses of the people in developing countries with the use of two comparative case studies in India and Kenya.

Literature Review and Analytical Frame Work

Despite the formation of GATT in 1947, agricultural protection had been growing in developed countries and, especially around 1980s, these protectionism has reached its climax, threatening traditionally agricultural exporting poor countries, resulting in developing countries to insist on agricultural protection trend in Uruguay Round from 1986 to 1994 (Anderson et al 1999). The Uruguay Round Agreement on Agriculture (URAA/AoA), the Sanitary and Phyto-sanitary Agreement (SPSA) and the Dispute Settlement Mechanism (DSM) have steered world agricultural trade from a chaotic way into a better organized manner (Athukorala 2004). However, at the time of Doha Round in 2001, it came to be convinced that free trade is not really free since developed countries practiced too much subsidization and developing countries pursued lots of tariffication processes, especially via raising non-tariff barriers (NTB) and using tariff rate quotas (TRQs) as a means of controlling agricultural trade. For example, nearly half of the world total domestic subsidization was contributed by EU, US and Japan alone (Arnold 2006) and, finally, the amount spent by developed countries on total subsidies is six times more than the amount they spent on foreign aid (Athukorala 2004). As a result, a share of agriculture in GDP percentage in developing countries decreased tremendously and rural populations in developing countries have been driven out of agriculture. Lots of rural people and farmers had to leave their farms, becoming unemployed, migrating to urban areas in the hope of getting jobs, facing financial and economic difficulties, etc. Thus, it is very convincing that agricultural trade liberalization has a great impact on the lives of rural people in developing countries and this paper will trace how those people from developing countries have been affected both mentally and physically from health point of view.

Case Study I: India

The Indian Government commenced economic reform and agricultural trade liberalization in 1991, reversing a policy practiced for decades (WTO 1998). Due to globalization of agriculture in India, the price in farm products are found to be reduced and shares of agriculture in GDP fell down over time as in the following table.

Table. 3. 1: Share of Agriculture in GDP and Employment (Posani 2009:20)


Share of Agriculture in GDP at 1999-2000 Prices (%)

Share of Agriculture in Employment - UPSS (%)

Ration of Worker Productivity in Agriculture to Non-Agriculture

Ratio of Worker Productivity in Non-Agriculture to Agriculture





















Note: GDP denotes Gross Domestic Product and UPSS denotes Usual Principal and Subsidiary Status

This table reflects how many farmers have been forced out of agricultural sector and it can clearly be seen that agricultural trade liberalization contributed to the reduced employment in agricultural sector in India. Moreover, due to declining farm prices because of agricultural trade liberalization, majority of farmers, especially small and marginal farmers, are losing money compared to how much they earned from agriculture as in the following table 3.2.

Table. 3. 2: Monthly Per Capita Income and Consumption by Size-Class of Holdings, 2003 (Posani 2009:25)

Size-Class (hectares)

Income (Rs)

Consumption (Rs)

< 0.01



0.01 - 0.40



0.41 - 1.00



1.01 - 2.00



2.01 - 4.00



4.01 -10.00






All Sizes



Source: National Sample Survey Organization (2005)

As in the table, the smaller the size of the farmers, the lesser their incomes and the higher the relatively higher commodity prices for them to consume. Accordingly, the small and marginal farmers are found to be worst affected.

Moreover, the opening up of market economy shifted the agricultural pattern from a mixed bag of traditional subsistence crops to cash crops, leading farmers to give up traditional rice cultivation in favor of non-food crops such as cotton. Furthermore, single cropping destroyed the soil and, in turn, it reduced the agricultural productivity. Hence, farmers have to invest much on fertilizers and pesticides, needing greater amount of water to grow cash crops (Posani 2009). Moreover, due to free trade, the state had to reduce their support on small-scale farmers and so, in the midst of supportive public institutions, the farmers have to invest by themselves on every amenities needed for farming and, finally, these poor farmers are greatly indebted. Hence, the Situation Assessment Survey of Farmers in the 59th round of NSS in 2003 shows that about half of all famers in India were indebted (Posani 2009).

3. 1. Impact on mental Health

Finally, all afore-mentioned financial burdens and losses inflicted on mental well-being of rural farmers and created huge psychological stresses. As a result, 156,562 farmers committed suicide between 1995 and 2004 (Johl 2006) and the total number of farmers' suicide amounted up to 200,000 in 2010 (Shiva 2010).

Figure. 3. 1: Suicide Mortality Rate among farmers & Non-farmers between 1995 & 2004 (Johl. 2006:39)

C:\akw cityu\AIS 5011 Soc & Env cons of Trade Liberalization\Term Paper\Agri & Slums\India_p photo.jpg

This figure shows the significant rise in suicide rate among Indian farmers due to mental illness caused by agricultural trade liberalization. In fact, mostly, since suicide follows the feelings of helplessness, hopelessness and great miseries, it is obvious that the devastation of economic status of these rural farmers due agricultural trade liberalization has deeply inflicted on mental or psychological health of rural people in developing countries.

3. 2. Impact on Food Security

Due to tariff liberalization, the steep fall in the price of farming products, which an Indian Economist Utsa Patnaik named it as "a collapse in rural livelihoods and incomes" (Patnaik, quoted in Bello 2007), also affects the food consumption of rural community. An average Indian family in 2003 consumed 76 kg less than the amount they consumed in 1998 and 88 kg less than the amount ten year ago (Bello 2007). Subsequently, according to 2009 World Development Indicators, 43.5% of all Indian children are detected to be underweight and 47.9% of all under-five children are found to be suffering from stunting (World Bank 2009:111). Even though there can be a couple more reasons for food insecurity problems, it is undeniable that agricultural trade liberalization has a great impact on the health conditions of Indian people.

3. 3. Impact on General Health Status via rapid urbanization

Mostly due to agricultural trade liberalization, many rural farmers had to leave not only their farms, but also even their villages since there is less job opportunity. On the other hand, since there are industrial and manufacturing jobs available near urban centers in big cities, a huge rural population moved from rural to urban areas in the hope of getting new jobs and better life. Accordingly, the number of migrant people swelled from 226 million in 1991 to 309 million in 2001. Among them, 218 million people represent the female population and 91 million male populations (Eldis-community 2007). Consequently, India faced unprecedented rapid urbanization and big cities like Delhi, Mumbai and Calcutta are over flooded with hundreds of thousands of new comers (Singh 2001). However, as Mike Davis (2004:9) mentions that "Urbanization elsewhere, as a result, has been radically decoupled from industrialization, even from development per se" (Davis 2004), those poor migrant rural people have to settle in the slums of those mega-cities. As a result, total slum population in India leaped to more than 40 million in 2001, making Mumbai as 'one of the largest slum-populated meta-city with more than 5 million slum dwellers up to 48.88 percentages of the whole city population (UNHABITAT 2006). Finally, the rural people who are in search of better conditions and jobs in urban area have to undergo dire slum living conditions in those big cities.

According to UNCTAD India Programme, in Indian slums, 40% of households are without safe drinking water and 90% without sanitation, resulting 50% of child mortality (UNCTAD 2006). Due to lack of water, lack of sanitation, overcrowding and non-durable housing, slum-dwellers suffered from a variety of infectious diseases. As an instance, in 2001, leptospirosis outbreak (worldwide zoonosis caused by pathogenic leptospires) occurred among Mumbai slum children in the monsoon (Karande et al 2002). Moreover, due to the little access to effective social and health care services, the fragile health conditions of slum-dwellers are more prone to modern hazards of mega-cities such as air pollution and noise pollution.

Due to lack of means to earn a living, one of the worst businesses slum dwellers have to enter is sex industry. According to some estimates, 40 to 50 percentages of slum women from Azmi Nagar slum community had to engage in prostitution (COHRE 2008). Moreover, in Mumbai slums, out of 2.5 million slum-children, 400,000 children are working in prostitution (Dhaliwal 2009). Subsequently, slum-dwellers become victims of sexually transmitted infections such as HIV/AIDS, hepatitis, etc.

Therefore, when we carefully look and trace the rural farmers and their families who left their places to urban-slums in order to escape the impacts of agricultural trade liberalization, they are found to end up in suffering from a variety infections and diseases due to poor slum living standards. Thus, Indian case study can really highlight the negative health impacts of agricultural trade liberalization.

Case Study II: Kenya

In the 1980s, Kenya was categorized by the World Bank as one of '10 intensely adjusting Sub-Saharan countries' under IMF's Structural Adjustment Program (SAP) (Ali 2004). Since SAPs are closely related to the Agreement on Agriculture (AoA), particularly linked to market access and market liberalization, it can be said that Kenya has already liberalized its market by the time they sign Uruguay Round Agreement on Agriculture in 1995 [1] (Nyangito 2000). On top of SAP, in line with URAA, Kenya government has to cut domestic and export subsidies, leaving rural farmers to invest money in agriculture by themselves. Meanwhile, European Union, which heavily subsidized its own farmers, sold wheat in Kenya at a very much cheaper price in 1992 and 1993. Consequently, Kenyan market was overwhelmed with cheap European wheat and Kenyan wheat price totally collapsed, destroying local cultivation and creating poverty (Mittal 2001, quoted by Shah 2005). Undoubtedly, even though Kenya had been food sufficient until 1980s, it has to import 80% of food, depending too much on the outside for its own basic food needs nowadays (Mittal 2001, quoted by Shah 2005).

4. 1. Direct Impact on Health Infrastructure

Due to trade liberalization agreement, Kenyan government had to cut its taxes on foreign investors, the government is lack of income and so it can no longer possess any financial resources to spend on health infrastructure in addition to SAP's strict rules for reducing health expenditure of government. Subsequently, the Kenyan national health spending dropped from 5.5% in 1972 to 2.8% in 1988 (Zulu et al 2004:210), resulting in lots of gaps in health care services for the people, especially for the rural people who lost their agri-business due to liberalization. As an instance, the government had to charge U.S. 2.15 dollars for STD Clinics which had been previously provided free of charge by the government and it was found out that the number of patient attendance fell by 35 to 60%, contributing to spread of STD and HIV epidemic (Zulu et al 2004). Moreover, due to free market economy, instead of national economic growth, Kenya became one 'highly indebted poor country (HIPC)' and the government has to spend 'more than three times as much servicing its debt than it did providing public health care services' in 1998, resulting 14% of adults with HIV (Global Exchange 2001).

4. 2. Impact on Health due to reduced food security

In addition to food-dumping by EU as mentioned above, cheap food imports are coming not only from developed countries but also from other developing countries through various commercial channels. Majority of Kenyan farmers are small scale farmers, having no capacity to compete with cheap food imports, and they were driven out of agricultural businesses in the midst of fierce free market competition and the country's most basic food production sector was greatly impaired. Even though Kenyan consumers seem to get food at a cheaper prices due to cheap imports, since majority are poor and have no money, people are far from taking advantage of cheap food prices. Hence, Hezron Nyangito's study of Kenya mentions "liberalized trade, including WTO trade agreements, benefits only the rich while the majority of the poor do not benefit but are instead made more vulnerable to food insecurity"(Nyangito 1999, quoted in Madeley 2000).

Consequently, in addition to a decrease in food production, Kenya experienced a decrease in calorie and protein supply per capita. Especially protein supply fell down by more than 15% (Global Exchange 2001), causing protein-energy malnutrition problems and weakening the immune system of the people who became more vulnerable to lots of infection. Under-nourishment is a really serious major health problem since it can affect more than one generation. If pregnant and nursing mothers are undernourished, lots of Kenyan babies will be born underweight and they have to start their life with a nutritional handicap which will have a great impact on their health throughout their whole lives. Hence, in one medical research study conducted among children in western Kenya in 2003, it was found out that stunting and underweight problems are very highly prevalent among the children in the rural areas (Kwena et al. 2003). Moreover, Kenya's fragile economy due to trade liberalization was compounded by draughts, conflicts, etc, Kenyan people became much poorer and about half of the population have to live in poverty and they are far from inaccessibility to health care measures. On top of that, SAP's pressure on the government to reduce spending on health care and social services compounded the people's vulnerability to ill health. As a result, since 1990s up to now, Kenyan's life expectancy has declined to 53 years and mortality rate among under-five children has risen over time (CSIS 2010). Hence, it is very obvious that agricultural trade liberalization has a huge negative impact on health status of Kenyan people by worsening food insecurity problems.

4. 3. Impact on General Health Status via Environmental Destruction

For agricultural globalization, Kenyan farmers have to abandon traditional subsistence farming and they have to cultivate cash-crops. As usual, cash-crops replaced mixed cropping and so this in turn increased soil degradation and the loss of biodiversity. These environmental destructions again led to reduced cropping and agricultural productivity and deepened the poverty of local people. Again, due to poverty, Kenyan people cannot eat enough food and suffer from lots of malnutrition problems as discussed above. In fact, the poverty issues led not only to malnutrition, but also to the lack of support for education, resulting in shortage of knowledge on how to deal with environment. As a result, Kenyan people unknowingly destroyed their environment by falling down trees just to get fire-woods, etc. Furthermore, due to rampant usage of pesticides and fertilizers, out of ignorance, water resources are seriously contaminated and this in turn creates lots of health problems among rural Kenyan residents (FSD 2010). Hence, it can be said that agricultural trade liberalization impacted indirectly on health via environmental destruction mechanisms.

4. 4. Impact on General Health Status via rapid urbanization

Rural subsistence economy being deeply undermined by agricultural trade liberalization, it is no longer possible for rural population to earn a living in their native places, a huge proportion of rural farmers and their families have to move to urban areas in search of work. Consequently, urban population growth rate shot up compared to average national population growth rate. For instance, while national annual population growth rate was 2.8% per year between 1980s and 1990s, the population growth rate of the city Nairobi alone was 7.4% per year, indicating the explosion of urban population and a huge influx of rural people to urban area (Zulu et al 2004). However, when we trace these migrated rural people, most of them cannot get a decent place in urban area and, instead, they have to settle in squatters and slums in cities. In Nairobi city alone, among 2.14 million residents, 55% of them are living in slums and squatters (COHRE 2008). Undoubtedly, majority of slum-dwellers are migrant rural families who have to be engaged in immensely crammed living space in slums. As an instance, in Kibera, which is the largest densely populated slum in Kenya, 2500 people have to live in a hectre and so one person gets a space of only 4 square metres (COHRE 2008).

Instead of being able to fulfill their hopes of better life, these rural people have to undergo lots of sufferings due to slums which are characterized by 'inadequate housing, delinquency, and crime, a lack of clean water, insufficient drainage, poor sanitation, a lack of public transport and environmental degradation' (COHRE 2008).

Moreover, even though rural Kenyan people hope to get a good job in Nairobi, their expectation turned to be totally wrong and the job opportunities are extremely scarce especially for formal sector. Due to frustration of unemployment and income insecurity, most slum-men became alcoholics and drug users and women have to engage in informal work sector. Hence, 83.9% of informal sector jobs are found to be run by women and so women are exceeding much more than men in informal sector in Kenya (Chen 2001). However, due to pre-existing traditional gender discrimination and woman subordination, when these women work closely with men in the informal sector, their male counterparts demanded sexual services in lieu of financial payment in transactions and so these women have to experience sexual harassment and exploitation. Thus, in one qualitative study conducted by the African Population and Health Research Center in 1999, one slum woman reveals:

If you go to a woman who is selling chang'aa [local gin] and buy a lot of it for yourself and friends, since you have promoted her [business], she can also offer to give you the other [sexual] service (Zulu et al 2004).

For these slum-women whose major income is from informal sector, they have no alternative to avoid sexual exploitation for their survival. In order to get regular customers for their informal small business, they have to provide sex to men to maintain relationships and this exploitative nature of informal sector business really make women exposed and vulnerable to a variety of sexually transmitted infections, including HIV/AIDS.

Furthermore, due to economic downturn, a lot of slum-women have to enter sex industry at last. Once they become prostitutes, since the most important and urgent need for them is to get money for their survival, they cannot retain any bargaining power to use condoms for prevention of sexually transmitted infections. In the same above study conducted in Nairobi slums, one sex worker mentions:

That time, you might not be thinking about the diseases because you have problems. That is the problem that women have. Now you see, I will not know if the man has a disease, because he has the money and I have a problem (Zulu et al 2004).

Hence, there is no room for any doubt that majority of Kenyan prostitutes get infected with HIV/AIDS. It is very obvious that, due to subsequent effects of agricultural trade liberalization, these rural-turned-urban slum-dwelling women have to suffer from HIV/AIDS and, finally, Kenya is now facing feminization HIV epidemic problems. According to UNAIDS, in 2008, the total number of HIV patients are 800,000 out of all 1,400,000 adult HIV-patients (UNAIDS 2008), the female HIV-patients equaling 57% of all total HIV patients.

In fact, the agricultural trade liberalization affects not just adult people, but also the children, especially the slum-children. Due to densely crowded slum-housing, the lack of privacy resulted in negative effects of mental growth and mental well-being of slum-children. They grow by observing the sexual relations of their parents.

You see, these houses of ours are small and children see a lot of wonders. That is why you see a child of 13 years is pregnant and it is because the parent did that and she saw and she went and tried it with another boy (Zulu et al 2004).

This led to the loss of parents' authority over their daughters' sexuality and they cannot persuade these girls to concentrate on education. Finally, these slum-daughters became pregnant at their young ages and this is followed by lots of health problems such as induced abortion. Therefore, nowadays, Kenya sees a lot of children in prostitution industry and it is not wrong to say that one of the main underlying reasons behind is poverty due to trade liberalization. If these families and children do not move to urban-slums from their villages, they will never come to possess these kinds of tragic stories.

To sum up, agricultural trade liberalization in Kenya drove rural population into urban-slums which in turn created situations for rural people to be exposed to deadly fatal viruses including HIV/AIDS. Hence, it is very obvious that agricultural trade liberalization really did impacted negatively on the health status of Kenyan people.


To sum up, even though World Bank, IMF and World Trade Organizations are always confidently guaranteeing the benefits of free market economy and trade liberalization, there are not many witnessing successful developing countries which can win the fruits of neo-liberalism. In fact, especially for poor countries having no advanced technology to produce modern commodities, apart from natural resources, agriculture is the heart and soul for developing countries. Moreover, majority of population in developing countries live in rural areas and about three-quarters of their income come from agriculture, it is utmost important to save and nurture the agricultural sector for those rural people. Hence, the demise of agricultural sector in developing countries means much more than the loss in one sector, but it means a major havoc and social chaos for the whole country.

In both India and Kenya, it can be witnessed that agricultural trade liberalization destroys not just farming industry but it created endless negative consequences including both social and environmental impacts. Ridiculously, the farmers who are the primary producer of food have to go hungry and their families and children have to suffer from malnutrition and food insecurity due to agricultural trade liberalization. Moreover, due to the government's cut on health budget, poor people became helpless when they become sick and ill. Again, environmental destruction compounded the sufferings of rural people. For the worst, agricultural trade liberalization drove rural people out of the farms into urban-slums and squatters where they have to suffer from a variety of health problems, finally resulting HIV epidemic. In conclusion, I strongly argue that agricultural trade liberalization has tons of negative health consequences in developing countries.