Social Welfare through International Trade
Chapter 8: Health Tourism and Public Policy
The market is prices and choices, supply and demand. Sometimes it satisfies the community’s reasonable expectations. Sometimes it does not. Where it does not, State regulation and public provision may be needed to correct the market failure. This chapter is concerned with the mixed health economy. It examines the ways in which the State can maximise the gains from health trade while keeping the potential downside at bay. It does so in six sections headed, respectively, ‘Taxes and subsidies’, ‘Laws and regulations’, ‘Infrastructure’, ‘Marketing’, ‘Global public spillovers’ and ‘The right to care’. The public interest in growth, employment, competition and justice is not always served by the freedom of trade. This chapter examines the policy tools that a pragmatic State can use to shunt the carriage on to a more promising track. It is never good to exaggerate the contribution that the State can make. Governments do not have perfect knowledge. There may be issues of bribery, corruption or electoral advantage. There may be pressure from landed grandees or industrial barons who demand special privileges for their own specific sector. There may be an ill-defined apprehension that goods are tangible while services are evanescent. It would clearly be wrong to expect too much from the State. It would, however, be just as wrong to underestimate the contribution that public policy can make. 8.1 TAXES AND SUBSIDIES Tax allowances reduce the cost of doing business. A Government which wants to encourage domestic or transnational investment will provide exemptions for the capital...
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