Does Openness Lead to More or Less Development? The Case of Health Deterioration

This paper is an attempt to test country claims on the social costs of openness especially in the case of poor developing countries. The intent of this paper is to extend the research on the costs and benefits of economic openness by trying to look at one dimension in particular, health, and to answer two distinct but linked questions. How does openness affect government spending? What are the true determinants behind public health spending? The paper finds a positive relationship between openness and government size for poor, less developed countries, and negative in the case of rich, developed economies. The paper also finds that poor, less developed countries rank healthcare spending lower than defense but higher than education in government spending allocation and are, therefore, spending more than proportionately on healthcare than they are spending on defense and less than proportionately than on education.