Monday, October 29, 2007

Trading Diseases.....

Economic integration, in the form of the flow of goods, people, and capital is generally perceived to be unambiguous good to economists. Non-economists are sometimes more skeptical, pointing to increased carbon dioxide output due to shipping goods across the globe, and loss of cultural uniqueness as the world becomes increasingly homogenous.

The first of these could be easily rectified with an appropriately implemented carbon tax, while the second is very hard to quantify, or rectify. And since economic integration is a natural phenomena that occurs when individuals are able to freely trade with each other, it's impossible to argue that preventing such integration is not itself costly to society.

But there are other unintended effects of integration as well. Remember SARS? It started in southern China and spread into Hong Kong, one of the most globally integrated regions anywhere. From there it spread far and wide, with over 8,000 patients falling ill in 25 countries in short order.

An even more serious case of integration leading to the spread of disease can be found in Africa. According to a recent study from Emily Oster (thanks to Marginal Revolution for the link), "a doubling of exports leads to as much as a quadrupling in new HIV infections" in Africa. Increasing trade flows result in increased movements of transient workers, who themselves are high risk, and take their diseases with them.

I wouldn't interpret this as evidence that trade is bad per se- it's just one more component to weigh up when deciding how to steer an economy. And remember that HIV infections are just one component of economic welfare. Trade also allows many members of society to improve their living standards, and in poor parts of Africa, this is likely to have a large positive effect on overall health and welfare.

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