Medical Tourism in Developing Countries

Plastic Surgery is Not Peanuts ● 27deals with the intangibility of services, and the separation of location ofproduction and consumption in space and time. Banga found that, becauseof the unique characteristics of services, namely nontransportability andintangibility, there is a need for a new theory of trade in services. 33With respect to an international legal framework to regulate trade inservices, in 1995, the General Agreement on Trade in Services (GATS) wasintroduced. It spelled out a system of legally enforceable conditions andrules for service trade and in the process confirmed how important tradein services had become. GATS distinguished between four modes of supplyof services across borders. Mode 1 refers to the cross-border supply ofservices that does not require the physical movement of either supplier orcustomer. Mode 2 entails the movement of the customer to the locationwhere the supply is in order for consumption to occur. Mode 3 refers tothe supply of services in one country by legal entities from another country.Finally, Mode 4 is the provision of services by providers who are temporarilymoved in order to provide the service. Medical tourism falls underMode 2, given that the patient moves to the country of the provider inorder to consume medical care. Mode 3 is also relevant for this studyinsofar as it includes the supply of services in one country by a legal entityoriginating in another country. That covers foreign ventures operatingin LDCs.In conclusion, medical tourism could not have taken off in the absenceof a globalized environment in which there is an increase in the importanceand trade of services. This environment is thus an enabler.Self-Perpetuating Circular Flows: Medical Tourismand Economic GrowthThis book proposes that medical tourism is related to economic growth indeveloping countries in two distinct ways. According to the first, discussedbelow, medical tourism brings about growth and development because it isa source of foreign currency, investment, and tax revenue. In turn, thatgrowth and development diffuses through the economy and results in economicinstitutions that can support further expansion of medical tourism.The second way in which medical tourism is related to economic growthhas to do with public health. While it is discussed in depth in chapter 7,suffice it to say here that medical tourism is a lucrative industry that earnsprofits that can in turn be used to improve public health. That in turnwill increase labor productivity, human capital, and longevity, all of whichwill further enable the expansion of the medical tourism industry. In theinitial stages of medical tourism, it is unlikely that revenues will be large