Weak Links in the Chain: A Diagnosis of Health Policy in Poor Countries

Recent empirical and theoretical literature sheds light on the disappointing experience with implementation of primary health care programs in developing countries. This article focuses on the evidence showing two weak links in the chain between government spending for services to improve health and actual improvements in health status. First, institutional capacity is a vital ingredient in providing effective services. When this capacity is inadequate, health spending, even on the right services, may lead to little actual provision of services. Second, the net effect of government health services depends on the severity of market failures—the more severe the market failures, the greater the potential for government services to have an impact. Evidence suggests that market failures are the least severe for relatively inexpensive curative services, which often absorb the bulk of primary health care budgets. A companion paper, available from the authors (see p. 219), offers a perspective on how government funds can best be used to improve health and wellbeing in developing countries. It gives an alternative view of appropriate public health policy, one that focuses on mitigating the characteristic market failures of the sector and tailoring public health activities to the government’s ability to deliver various services.