Health economics in low income countries: adapting to the reality of the unofficial economy

There is some evidence in established market economies that health economics is having a positive impact on policy. Although many of the underlying assumptions can be questioned, the predictions made are broadly applicable to a range of relatively wealthy industrialised economies. In low and middle income countries these assumptions are often less applicable. In particular, assumptions about the regulation and functioning of public and private sector activities often fail to account for the operation of the unofficial health care sector. This paper illustrates how unofficial markets might operate in the context of the health care sector in a developing economy. In particular it examines how the motives of practitioners may be influenced by a lack of regulation and under-funding which in turn contribute to the presence of unofficial activities. Unofficial market activities could influence and distort the impact of policies commonly being pursued in many countries. Further research is required into the functioning of these markets in order to align the assumptions of policy with the reality of the developing health care sector. (C) 2001 Elsevier Science Ireland Ltd. All rights reserved.