Medical Tourism in Developing Countries

Would You Like a Safari With Your Lasik Surgery? ● 87combined public and private domestic shares. The largest form of foreignparticipation is through direct foreign investment, which takes place in twoways, as in medical tourism. A foreign company may purchase or build atourist facility from scratch, or it may lend investment capital to a domestictourism enterprise. Such joint ventures are common. As mentioned inchapter 2, LDC governments welcome foreign investment because it satisfiesthe high capital requirements of the initial investment in infrastructureand facilitates, it transfers some of the risks to foreign firms, it facilitatesthe transfer of technology and managerial know how, it is a reliable sourceof tax revenue, and it stimulates development in other parts of the economythrough backward linkages. Governments often adopt policies that encouragethe inflow of venture capital to construct resorts and hotels that arethen favored with a variety of tax incentives.In addition, foreign involvement in the LDC tourist industry occursthrough the intermediary sector including tour operators and travel agents.There are many such operators and the market is highly competitive.Both with respect to medical tourism and nonmedical tourism, there areproblems in foreign ownership and control that have led to various formsof regulation. As discussed in chapter 2, high leakages may occur as a resultof the repatriation of profits and incomes. Also, foreign business activitiesmay drive out domestic competition and suppress local entrepreneurship.International Lending InstitutionsSince public-private cooperation and collaboration in health have becomecommon, international lending institutions such as the World Bank and theInternational Monetary Fund (IMF) do not limit themselves to fundingpublic projects in developing countries, but rather have expanded to includeprivate companies. Nevertheless, their primary health related objective is tofund public health projects. Such projects usually focus on policy and institutionalreforms aimed to improve service delivery. 94 They also support thedevelopment of health financing policy and aim to increase the efficiencyof public expenditures. These institutions explore a pro-poor focus toincrease the availability of health care to more people. Also, sometimes theprojects promote outsourcing in order to achieve efficiency gains. Indeed,the countries under study have received money from the international communityfor this purpose.International lending occurs for public health programs, not for privatemedical care for profit. Nevertheless, it is relevant for a study of medicaltourism insofar as international lending is used to build infrastructure thatis crucial for the industry’s development. Developing local infrastructure, as