Medical Tourism in Developing Countries

136 ● Medical Tourism in Developing Countriesto grow over time. Yet, it is too simplistic to focus only on technologicalchange, since numerous other factors are also relevant. Indeed, Robert Barroclaimed that while technological change theories are important for understandinggrowth as a global phenomenon, as well as growth in countries‘at the technological frontier,’ they are less applicable in most regions of theworld. There, a return to more classical approaches is preferable, ones thatincorporate “government policies (including institutional choices that maintainproperty rights and free markets), accumulation of human capital, fertilitydecisions, and the diffusion of technology.” 147 The countries studiedhave excelled with respect to the capacity to generate technological change,the capital with which to apply it, the appropriately skilled labor force tosupport innovation, the access to markets in which to buy and sell products,and the environment (political, institutional, etc.) to enable all this to occur.In other words, they have satisfied both the requirements for growth setforth by the economists who focus on technology as well as those who focuson nontechnological factors.Thus, countries under study are well suited to spearhead the developmentof medical tourism because they have the advantages listed above(such as low costs of production, domestic human capital, developed infrastructureand institutions, liberalized economies, and so forth). Not everycountry has every advantage. Indeed, while Chile has a dynamic businessenvironment, its political parties are perceived to be corrupt; India has ademocratic political system, but a mediocre ranking with respect to enforcementof legal contracts. As noted at the beginning of this chapter, somecritical mass of advantages is necessary, and the composition of that massdiffers from country to country. Together, these advantages provide eachcountry with the capacity to engage in medical service trade and to use itas a growth-promoting development strategy. When this capacity is coupledwith incentives to promote medical tourism, then countries are poised totake off.What are these incentives? The greatest incentive comes from thedemand for medical services (discussed in chapter 3). A large foreigndemand for health care stimulates supply.In addition, there are secondary incentives to supply medical servicesborn from endogenous factors that are particular to each country. Oneexample from Thailand is the overcapacity in the medical sector that couldonly be filled with foreign tourists. After the 1997 economic crisis, the Thaigovernment’s health plan was reformed in a way that decreased domestic useof private sector health care. As a result, private hospitals with high technologyequipment and high quality health personnel lay fallow and of necessityturned to international patients. 148 Another example of an endogenous factor