Game Theory and Economic Analysis: A Quiet Revolution in Economics

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Gorbachev had claimed that he wanted to reform the Communist party on the principles of perestroika restructuring and glasnost openness. But Reagan believed that there was one thing left for Gorbachev to do to prove his earnestness. Gorbachev, open this gate. Gorbachev — Mr. Gorbachev, tear down this wall! Two years later, on November 9, , East Germans began dismantling the Wall. Earlier in the same year, Gorbachev had allowed the first open elections since to be held in the Soviet Union. For the next two years the free world rejoiced as it witnessed the systematic downfall of communism in Eastern Europe.

Communism had failed.

Reagan and the free world had won. The communism of the Soviet Union had been based on the economic theories of Karl Marx and Friedrich Engels, who had taught that the basic substructure of civilization was economic. All of history, they argued in The Communist Manifesto , had been characterized by the struggle between competing economic groups. In particular, this struggle found focus in the tension between the bourgeoisie the wealthy and ruling classes and the proletariat the working classes.

This struggle could resolve itself only by means of a working class revolution. Such a revolution would abolish private property and give the workers control over the means of production. Communism, as such, never worked. Even during the heyday of the Soviet Union, the outcomes that Marx predicted never materialized.

Yet even as the visible symbols of Marxism came crashing down at the close of the twentieth century, there was another, more subtle, version of Marxism coming to fruition. The apparent downfall of communism merely masked the imminent victory of a new variant, one that was less visible yet more subversive, less observable, yet more insidious.

It was a type of Marxism that owed its genesis to the Italian revolutionary, Antonio Gramsci — Antonio was born in , the fourth of seven children, in the Italian city of Ales, on the island of Sardinia. His childhood was far from happy. The family was forced to move to Ghilarza, where Antonio suffered an accident that left him hunched-backed and permanently stunted. At eleven Antonio had to leave school and get a job to support the struggling family. He was later able to complete his schooling, distinguishing himself as an exceptional student.

He earned a scholarship to study philosophy at the university at Turin, where he gained a reputation as a writer. Like many of the youth in the Italian universities of the early twentieth century, Gramsci was attracted to the new revolutionary ideas. He wrote frequently about the views of Karl Marx, whose Communist Manifesto had been energizing workers throughout Europe ever since its appearance in Revolutionaries in Russia were able to mobilize the working classes by exploiting the climate of discontent.

Faced with the unprecedented casualties Russia was experiencing in the war, together with soaring inflation and fuel shortages, the exhausted Russians were amenable to the utopian promises of the revolutionaries. A provisional government was set up, headed by moderate Constitutional Democrats drawn primarily from the middle-class and aristocracy. They emphasized free speech, freedom of religion, and advocated assemblies designed to maintain these and other liberties.

However, the exiled Marxist revolutionary Vladimir Lenin — had other plans. Lenin arrived on the scene from Switzerland in April Petersburg, and in Moscow. During the night of November 6, they seized power in St. However, gaining control over all of Russia was another matter. Together with his friend Palmiro Togliatti he formed the Italian Socialist Party, in addition to starting the periodical, The New Order, through which he disseminated the ideas of the revolution. Gramsci spent eighteen months in the Soviet Union, learning from the communists. Though he identified himself with the aims of the Bolsheviks and hoped that their goals could spread throughout the entire world, he held reservations about their brutal methods.

He was dismayed that when the Great War had broken out in , proletariat throughout Europe — including those previously aligned with Marxism — flocked to the cause of their own nations. He reasoned that had the working classes possessed the sort of class consciousness Marx had postulated, they ought to have understood that participating in the conflict was not in their best interests. Before and after his visit to the Soviet Union, Gramsci came to realize that the problems standing in the way of communism becoming an international reality were more basic than mere class struggle.

Most workers had deep loyalties that went far deeper than economic considerations — loyalties such as family and religion. Even in the Soviet Union where Marxism appeared to work, Gramsci saw that it could only be sustained through the continual threat of terror. At first Gramsci had sought for a solution that was consistent with traditional Marxist doctrine. However, he eventually came to see that communists like Marx and Lenin had things the wrong way around. Whereas Marx had argued that the substructure of civilization was economic, Gramsci came to see it as cultural and spiritual.

What this meant in practice was that power did not rest only with those who controlled the means of production: it depended on those who controlled the institutions and disciplines of culture, including philosophy, politics, art, literature, media, religion, and most importantly, the educational systems from elementary school to university. Only by concentrating on these domains could the heart and minds of the proletariats be reached and a classless society achieved.

Gramsci saw that this would involve an attack on the very root of Western civilization: Christianity itself. The cultural legacy wrought by Christianity thus made the proletariat immune to the liberating influences of Marxism. Even among those individuals who had abandoned the Christian faith, their basic instincts were still deeply rooted in the residual mores of Christian society. It followed, Gramsci realized, that the proletariat revolution could never succeed until the integrity of the culture that was blocking it had been compromised.

Before the political hegemony of communism could emerge, the ideological hegemony of Christianity would first have to be dismantled. Workers must begin to see themselves as being separated from the ruling classes not through economics but through ideology. Marxist categories must first be internalized by the masses before they could be externalized by the socialist political parties.

As Nash has shown, every finite game, or the domain of mixed strategies, has at least one equilibrium point. If there is more than one equilibrium point, an intermixture of strategy choices need not give another equilibrium point, nor is the payoff to players the same if the points differ from each other. However, every individual game investigated, even with arbitrarily large n, has been found to possess a solution. The indications are that the proof for the general case will eventually be given. Other definitions of solutions— still differing from that of the Lausanne-Robinson Crusoe convention—are possible and somewhat narrow the field of choices.

They are inevitably based on further assumptions about the behavior of the participants in the game, which have to be justified from case to case. In certain n-person games the sole purpose is to form a majority coalition. Ties in voting may occur, and weights may differ from one player to another; for example, the chairman of a committee may have more than one vote.

Games of this nature can be identified with classical cases of production, where the players represent factors of production. It has been proven that even in relatively simple cases, although complete substitutability among players may exist, substitution rates may be undetermined and values are attributed to the players factors only by virtue of their relation to each other and not by virtue of their individual contribution. Thus, contrary to current economic doctrine, substitutability does not necessarily guarantee equality as far as value is concerned. Simple games are suited for interpretation of many political situations in that they allow the determination of the weights, or power, of participants in decision processes.

A particular power index has been proposed by Shapley. It is based on the notion of the average contribution a player can make to the coalitions to which he may belong, even considering, where necessary, the order in which he joins them. The weight of a senator, a congressman, and the president in the legislative process has been calculated for the United States.

The procedure is applicable to other political systems—for example, the Security Council of the United Nations Shapley Every increase in the number of players brings new phenomena: with the increase from two to three players, coalitions become possible, from three to four, ties may occur among coalitions, etc. There is no guarantee that for very large n an asymptotic convergence of solutions will occur, since coalition formation always reduces large numbers of individual players to small numbers of coalitions acting upon each other. Thus, the increase in the number of players does not necessarily lead to a simplification, as in the case of an enlargement of the numbers of bodies in a physical system, which then allows the introduction of classical methods of statistical averages as a simplification.

When the game is inessential, the number of participants is irrelevant in any case. An effective extension of the theory by the enlargement of numbers can be achieved by viewing games played separately as one composite game and by introducing contributions to, or withdrawals from, the proceeds of a given game by a group of players outside the game under consideration.

These more complicated notions involve constantsum games and demonstrate, among other things, how the coalition formation, the degree of cooperation among players, and consequently the distribution of the proceeds among them are affected by the availability of amounts in excess of those due to their own strategies alone. Strategy is clearly greatly influenced by the availability of greater pay ments than those that can be made by only the other players. Thus, coalitions—namely, social structures—cannot be maintained if outside con tributions become larger than specified amounts, such that as a consequence no coalition can exhaust the amounts offered.

It can also be shown that the outside source, making contributions or withdrawals, can never be less than a group of three players. These concepts and results are obviously of a rather complicated nature; they are not always directly accessible to intuition, as corresponds to a truly mathematical theory. When that level is reached, confidence in the mathematical results must override intuition, as the experience in the natural sciences shows.

The fact that solutions of n-person games are not single numbers or single sets of numbers—but that the above-mentioned, more complicated structures emerge—is not an im perfection of the theory: it is a fundamental property of social organization that can be described only by game-theoretic methods. The fictitious player is either winning or losing, but since he is fictitious he can never become a member of a coalition. He will lose according to the degree of cooperation among the players.

If the players cooperate per fectly, the maximum social benefit will be attained. In these games there is an increased role of threats, and their costs to the threatening player, although threats already occur in the zero-sum case. The discriminatory solutions, first encountered for the three-person, zero-sum game, serve as in struments to approach these problems. Most ap plications to economics involve gains by the com munity—an economy being productive and there being no voluntary exchange unless both sides profit—while many other social phenomena fall under the domain of zero-sum games.

The non zero-sum theory is so far the part of game theory least developed in detail, although its foundations seem to be firmly established by the above proce dure. Game theory is applicable to the study of those social phenomena in which there are agents striving for their own advantage but not in control of all the variables on which the outcome depends. The wide range of situations of which this is true is obvious: they are economic, political, military, and strictly social in nature. Applications have been made in varying degree to all areas; some have led to experiments that have yielded important new insights into the theory itself and into special processes such as bargaining.

Finally, the possi bility of viewing the basic problem of statistics as a game against nature has given rise to modern statistical decision theory Wald The influ ence of game theory is also evident in philosophy, information theory , cybernetics, and even biology. Aumann, R. Dresher, L. Shapley, and A. Tucker editors , Advances in Game Theory. Princeton Univ. Baumol, William J. Unpublished manuscript. Contains the letter from Waldegrave to Remond de Montmort, first published in the second edition of Montmort , describing his formulation, and a discussion by Harold W.

Kuhn of the identity of Waldegrave. Berge, Claude Theorie generale des jeux a n personnes. Paris: Gauthier-Villars. Blackwell, David; and Girshick, M. New York : Wiley. Braithwaite, Richard B.

Cambridge Univ. Burger, Ewald Introduction to the The ory of Games. Englewood Cliffs, N. Dresher, Melvin; Shapley, L. Annals of Mathematic Studies, Vol. Edgeworth, Francis Y. New York : Kelley. Econometrica 21, no. Reading, Mass. Kuhn, Harold W. Luce, R. New York. Paris: Quillau. Nash, John F.

Claude d'Aspremont - Bibliography

Shapley, L. Vol ume 2, pages in Harold W. Kuhn and A. Tucker editors , Contributions to the Theory of Games. Volume 4: Applications diverses et conclusion. Volume 4, pages in Harold W. Williams, John D. New York: McGraw-Hill. The major economic applications of game theory have been in oligopoly theory, bargaining theory, and general equilibrium theory. Several distinct branches of game theory exist and need to be identified before our attention is limited to economic behavior.

John von Neumann and Oskar Morgen-stern, who first explored in depth the role of game theory in economic analysis , presented three aspects of game theory which are so funda mentally independent of one another that with a small amount of editing their opus could have been published as three independent books. The first topic was the description of a game, or interdependent decision process, in extensive form. The second topic was the description of the two-person, zero-sum game and the development of the mathematical theory based upon the concept of the minimax solution.

This theory has formal mathematical connections with linear programming and has been applied successfully to the analysis of problems of pure conflict; however, its application to the social sciences has been limited because pure conflict of interests is the exception rather than the rule in social situations [ see Programming ]. They suggested a set of stability and domination conditions which should hold for a cooperative solution to an n-person game. It must be noted that the implications of this solution concept were developed on the assumption of the existence of a transferable, interpersonally comparable linear utility which provides a mecha nism for side payments.

Since the original work of von Neumann and Morgenstern, twenty to thirty alternative solution concepts for the n-person, non-constant-sum game have been suggested. Some have been of purely mathematical interest, but most have been based on considerations of bargain ing, fair division, social stability, and other aspects of human affairs. Many of the solution concepts do not use the assumption of transferable utility. Markets in which there are only a few sellers oligopoly , two sellers duopoly, a special case of oligopoly , one seller and one buyer bilateral mo nopoly , and so on, lend themselves to game-theo retic analyses because the fate of each participant depends on the actions taken by the other partici pant or participants.

The theory of games has pro vided a unifying basis for the mathematical and semimathematical works dealing with such situations and has also provided some new results. The methodology of game theory requires explicit and detailed definition of the strategies available to the players and of the payoffs associated with the strategies.

This methodology has helped to clarify the different aspects of intent, behavior, and mar ket structure in oligopolistic markets Shubik Perhaps the most pervasive concept underlying the writings on oligopoly is that of a non-cooperative equilibrium. A group of individuals is in a state of noncooperative equilibrium if, in the individual pursuit of his own self-interest, no one in the group is motivated to change his strategy.

This concept is basic in the works of Cournot, Ber-trand, Edgeworth, Chamberlin, von Stackelberg, and many others. Nash has presented a general theory of noncooperative games, based on the equilibrium-point solution. Noncooperative solutions, whose outcomes need not be Pareto optimal, have been distinguished from cooperative solutions, whose outcomes must be Pareto optimal.

Also, equilibrium points are distinguished on the basis of whether the oligopoly model studied is static or dynamic. In much of the literature on oligopoly, quasi-cooperative solutions have been advanced and quasi-dynamic models have been suggested. Thus, while the Chamberlin large-group equilibrium can be interpreted as the outcome of a static noncooperative game, the small-group equilibrium and the market resolution suggested by Fellner are cast in a quasi-dy namic, quasi-cooperative framework.

New results. The kinky oligopoly demand curve and the more general problem of oligopolistic demand have been re-examined and interpreted. Other results concern stability and the Edgeworth cycle in price-variation oligopoly; duopoly with both price and quantity as independent variables; and the development of diverse concepts applicable to cartel be havior, such as blocking coalitions Scarf , discriminatory solutions, and decomposable games.

Selten has been concerned with the problem of calculating the noncooperative equilib ria for various classes of oligopolistic markets. His work has focused on both the explicit calculation and the uniqueness of equilibrium points. Vickrey , Griesmer and Shubik , and others have studied a class of game models applicable to bidding and auction markets. Working from the viewpoint of marketing and operations research, Mills and others have constructed several noncooperative game-theoretic models of competition through advertising.

Jacot has considered problems involving location and spatial com petition. Behavioristic findings. Game theory can be given both a normative and a behavioristic interpretation. No single set of normative criteria has been generally accepted, and no universal behavior has been validated. Where there is no verbal or face-to-face communication, there appears, un der the appropriate circumstances, to be some evi dence in favor of the noncooperative equilibrium.

Transportation Economics/pri

The theory of bargaining has been of special interest to economists in the context of bilateral monopoly, which can involve two firms, a labor union and a firm, or two individuals en gaged in barter in the market place or trying to settle a joint estate. Any two-person, nonconstant-sum situation, be it haggling in the market or in ternational negotiations, can be formally described in the same game-theoretic framework. However, there are several substantive problems which limit application of this framework and which have re sulted in the development of different approaches.

In nonconstant-sum games communication between the players is of considerable importance, yet its role is exceedingly hard to define. In games such as chess and even in many oligopolistic mar kets, a move is a well-defined physical act—moving a pawn in a definite manner or changing a price or deciding upon a production rate; in bargaining it may be necessary to interpret a statement as a move. The problem of interpreting words as moves in negotiation is critical to the description and un derstanding of bargaining and negotiation proc esses.

A desirable property of a theoretical solution to a bargaining problem is that it predicts a unique outcome. In the context of economics this would be a unique distribution of resources and unique prices, if prices exist at all. Unfortunately, there are few concepts of solution pertaining to economic affairs which have this property.

The contract curve has the property that any point on it is jointly optimal both bargainers can not improve their position simultaneously from a point on this curve and individually rational no point gives an individual less than he could obtain without trading.

The Pareto-optimal surface is larger than the contract curve, for it is restricted only by the joint optimality condition. Any point on the Pareto-optimal surface that is individually rational is called an imputation. In the two-person bargain the Edge-worth contract curve coincides with two game-theoretic solutions, the core and the stable set. The core consists of all undominated imputations it may be empty. A stable set is a set of imputations which do not dominate each other but which to gether dominate all other imputations. The core and stable-set solutions can be defined with or without the assumption of transferable utilities.

Neither of these solution concepts predicts a unique outcome. These are generally known as value solutions, since they specify the amount that each participant should obtain. For the two-person case, some of the fair-division or arbitration schemes do predict unique outcomes.

The Nash fair-division scheme assumes that utilities of the players are measurable, but it does not need as sumptions of either comparability or transferability of utilities Shubik Other schemes have been suggested by Raiffa , Braithwaite , Kuhn in Shubik , and others. Another approach to bargaining is to treat it in the extensive form, describing each move explicitly and showing the time path taken to the settlement point.

Most of the attempts to apply game theory in this manner belong to studies in social psychology, political science , and experimental gaming. However, it has been shown Harsanyi that the dynamic process suggested by Zeuthen is equivalent to the Nash fair-division scheme. Game theory methods have provided several new insights in general equilibrium economics. Under the appropriate conditions on preferences and production, it has been proved that a price system that clears the market will exist, provided that each individual acts as an independent maximizer. This result holds true independently of the number of participants in the market; hence, it cannot be interpreted as a limiting phenomenon as the number of participants increases.

Yet, in verbal discussions contrasting the competitive market with bi lateral monopoly, the difference generally stressed is that between the market with many participants, each with little if any control over price, and the market with few participants, where the interactions of each with all the others are of maximum importance.

It refers to the case in which, if each individual considers himself an isolated maximizer operating in an environment over which he has no control, the results will be jointly optimal. The power and appeal of the concept of competitive equilibrium appears to be far greater than that of mere decentralization.

This is reflected in the finding that under the appropriate conditions the competitive equilibrium may be regarded as the limit solution for several conceptually extremely different game-theo retic solutions. Convergence of the core. It has been noted that for bilateral monopoly the Edgeworth contract curve is the core. Edgeworth had suggested and presented an argument to show that if the number of traders is increased on both sides of the market, the contract curve would shrink interpreted appropriately, given the change in dimensions.

Shubik b observed the connection between the work of Edgeworth and the core; he proved the convergence of the core to the competitive equilibrium in the special case of the two-sided market with transferable utility and conjectured that the result would be generally true for any number of markets without transferable utility. This result was proved by Scarf the proof, although achieved earlier, is described in Scarf ; Debreu and Scarf improved upon it Using the concept of a continuum of players rather than considering a limit by replicating the finite number of players in each category, as was done by Shubik, Scarf, and Debreu , Aumann proved the convergence of the core under somewhat different conditions.

When transferable utility is assumed, the core converges to a single point and the competitive equilibrium is unique. Otherwise it may split and converge to the set of competitive equilibria. The convergence of the core establishes the existence of a price system as a result of a theory which makes no mention of prices. It may be looked upon as a formalization of countervailing power, inasmuch as it rules out imputations which can be dominated by any group in the society. Shapley and Shubik have shown the convergence of the value in the two-sided market with transferable utility.

In unpublished work Shapley has proved a more general result for any number of markets, and Shapley and Aumann have worked on the convergence of a nontransferable utility value recently defined by Shapley. Harsanyi was able to define a value that generalized the Nash two-person fair-division scheme to situations involving many individuals whose utilities are not transferable. This preceded and is related to the new value of Shapley, and its convergence has not been proved.

There are several other value concepts Selten , all of which make use of symmetry axioms and are based upon some type of averaging of the contributions of an individual to all coalitions. If one is willing to accept the value as reflecting certain concepts of symmetry and fairness, then in an economy with many individuals in all walks of life, and with the conditions which are required for the existence of a competitive equilibrium satisfied, the competitive equilibria will also satisfy these symmetry and fairness criteria.

Noncooperative equilibrium. One of the important open problems has been the reconciliation of the various noncooperative theories of oligopolistic competition with general equilibrium theory. The major difficulty is that the oligopoly models are open in the sense that the customers-are usually not considered as players with strategic freedom, while the general equilibrium model considers every individual in the same manner, regardless of his position in the economy.

Since the firms are players in the oligopoly models, it is necessary to specify the domain of the strategies they control and their payoffs under all circumstances. In a general equilibrium model no individual is considered a player; all are regarded as individual maximizers. When an attempt is made to consider a closed economic model as a noncooperative game, considerable difficulties are encountered in describing the strategies of the players.

Actions plans remained somewhat lost in a haze of good intentions Deacon et al. In this context, some commitments over a range of social policy areas were made but low levels of institutionalization for implementation, coordination, and compliance affected the depth and pace of regional social policies. Politically, rudimentary institutional structures for such issues in both Andean Community and MERCOSUR left social policy subject to the conditionality of international financial institutions and the unleashing of the business appetite of private providers.

In this sense, the open-regionalism of the neoliberal s the tag used to contrast it with the less market-oriented construction of past decades understood Latin America as part of an Americanized system, looking to the north and postulated regionalism through financial and trade linkages Grugel, ; Phillips, ; Tussie, a. Global health policies were a central site for implementing neoliberal reforms, especially after the World Development Report: Investing in Health World Bank, and hand in hand with the Free Trade Area of the Americas in the region.

For one, the World Bank became increasingly interested in the reorganization of public sectors, including the health sector, and the Bank sharply increased its loans for health restructuring while private investment was welcomed. The World Bank also had traction over Inter-American Bank programs Babb, ; Vivares, and together they called for cutting down public involvement in health services delivery and instructed many countries to reduce public expenditure on health.

And third, they insisted on an increased reliance on the market to finance and deliver healthcare as well as calling for privatization of public healthcare services Akin et al. Altogether, country programs shifted their priorities from programs designed to serve those most in need to programs that offered cost-effective interventions while throwing open the door to the business interests of international health insurance companies, such as AIG, AETNA, MetLife, Accord together with providers of equipment, medicines, and services.

Market-making policies gained the day and healthcare became market driven as poverty rates and income inequality increased region wide Riggirozzi, b. Welfare provision was systematically squeezed and access reduced to those who could pay for healthcare services, medicines, and some good schooling. The shift toward selective primary healthcare and the primacy given to business interests generated rather acute controversy.


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These problems have certainly played a role in stimulating new actors to move into the health arena and to search for new institutional arrangements. Governments committed to more democratic economic management, deeper and broader popular representation, redistribution, and better and more accessible public services took office in Venezuela in , Brazil and Argentina in , Uruguay in , Bolivia in , Ecuador in , and Paraguay in This shift is often characterized as a move away from neoliberalism to post-neoliberalism Grugel and Riggirozzi, ; Ruckert and MacDonald, , reflecting more radical models of political inclusion and citizenship.

The New Left has been explained as a reaction against what came to be seen as excessive marketization and the elitist and technocratic democracies that accompanied market reforms at the end of the 20th century. By force, the profound changes in the political economic orientation in many countries in the region called for redefining the dynamics in region-building. The outside-in dynamic shifted to an inside-out one, whereby the domestic political economy was projected, and projected with a shift to trans-national solidarism. These points are the key to understanding why an essentially political body as UNASUR takes on the politics of solidarity and health, in particular as a cementing issue for region building.

The right to health, universal access, and social determinants became overtly political flags. In , 12 heads of state and government signed the Treaty of the Union of South American Nations in order to. As UNASUR came into being, leaders collectively challenged a view of development that reduced it to its trade and economic dimension. Social policy and health became one of the cornerstones of collective diplomacy.

In particular, Brazil and Venezuela were foremost among those challenging the premises of the neoliberal health agenda. Together, the Brazilian and Venezuelan governments in response to or in alliance with civil society moved to create a consensus over selected topics and create a regional institution that could be operational and which could also lay the foundations for a body of thought. In consequence, regional diplomacy moved to de-neoliberalize and health diplomacy in particular became a strategic policy driver whereby joint efforts could flag a cooperative normative framework to counter the Washington Consensus.

In this context, health illustrates a strategic policy area where the social turn in regional cooperation searched for renewed collective goals, norms, and practices. South America became a space for contention and contestation, as well as an arena of consensus-building. In short, UNASUR Member States understood that the best way to enhance and coordinate efforts would be through the creation of intergovernmental sectoral councils composed of the respective ministers.

In line with the argument laid out by Riggirozzi a , we consider that this turned UNASUR into a central actor engaged in regional health diplomacy, understood as a double track process that covers regional and international cooperation. Such unpacking of regions allows us to move away from one-dimensional views that posit regional cooperation as mainly led by the imperatives of the global economy Tussie, a.

Thus, the creation of UNASUR is a space of socialization, for consensus building and the establishment of common interests. The trade dimension was scarcely mentioned in the treaty which makes clear the eminently political nature of the organization and the importance attached to cooperation. Both countries made huge leaps to strengthen the bonds between health and international diplomacy. On the part of Venezuela, the Miracle Missions follows in the steps of Cuban medical internationalism.

The Missions consist of a concessional regional social program that grants free eye care. Founded in Cuba in with Venezuelan patients, the project was then relocated to Venezuela where it offers free care to needy patients from all over Latin America and the Caribbean. The case of Brazilian health diplomacy may be lower key but not less effective as an agenda setter. Brazil had a leading global role in the negotiations that led to the Framework Convention for Tobacco Control, the first treaty negotiated under the auspices of the WHO. Moreover, together with India and South Africa in the World Trade Organization, the threesome spearheaded the Doha Declaration on Intellectual Property and Public Health allowing the circumvention of patent rights for better access to essential medicines in the case of epidemics.

The leading personality of Paolo Buss, as head of the Fiocruz Foundation 1 from to and president of the World Federation of Public Health Associations, was a prime mover, as was former President Lula, a trade unionist and active participant in the World Social Forum together with the late President Chavez of Venezuela Cepik and Sousa, Both Lula and Chavez not only had a heartfelt sense of social commitment to the dispossessed and vulnerable but also a flair for a deeply personalized diplomacy aiming to make contact with ordinary people and their needs.

Brazil could count on the political ascendancy of the movimiento sanitarista and the diplomatic knowhow of driving global processes Tussie, b. The declaration hand in hand with the much publicized report of the Commission on the Social Determinants of Health reflects a year trend in which health rose to prominence in global policy agendas. Although Brazil also extended its muscle across to Africa and in selected multilateral for such as the WHO, the World Intellectual Property Organization, and the World Trade Organization, as Riggirozzi b shows health also became a strategic policy driver redefining the terms of regionalism in South America.

These levels are interconnected via the exchange of human and economic resources and institutionalization of regulatory frameworks. The guidelines for cooperation were set out in its 5-year plan — extending to: health surveillance and response; the development of universal health systems; action on social determinants; universal access to medicine; the development of human resources.

These five areas were respectively taken up by the five Technical Groups of the Council composed of senior representatives of health ministries. Each of the five networks develops its own agenda for cooperation following the guidelines of the 5-year plan.

Don Ross and Harold Kincaid

Beyond that central emphasis for horizontal cooperation, the South American Health Council has a high profile instrumental role in global diplomacy developing common positions in the WHO. Unlike the framework of the European Union where health policy is regulated through supranational institutions the Commission and Parliament , the Health Council is an intergovernmental body. ISAGS is a defining feature in the plethora of new regional initiatives.

The organization is hosted in Rio de Janeiro and is meant to open a liason office in Ecuador in order to bring it closer to the UNASUR headquarters and increase its political leverage. Moreover, the South American epidemiological shield in the words of Buss and Tobar amount to a regional public good, that is, a service which is provided collectively and whose benefits are offered to all groups in the region. A prime example of the importance of the shield was seen at the time of the pandemic influenza.

Prior to the eruption of cases in Argentina and Chile, an early warning system triggered joint action at the borders, while countries got going with diagnostic and therapeutic methods. The notion of health as a regional public good in turn leads to the promotion of universal and equitable health systems. The regional value added involves the development of trans-border healthcare and access to the national services in each of the member countries for all inhabitants.

This is of no small importance in a region with intense migration flows and where migrants often remain employed informally in host countries Braga et al. To the sanitary challenge, UNASUR added the political challenge of designing regional strategies towards better access to medicines through joint negotiations with pharmaceutical companies to secure fair prices for drugs, diagnostic kits, vaccines and medical equipment, and the improvement of human and industrial capacity.

Patents and access to medicine have demanded a more nuanced assessment of how regional arrangements can maximize and enhanced the reach and outcomes of public policy, emphasizing that economic interests in the global health industry and intellectual property laws should not become an obstacle to protect public health.

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The promotion of universal access to medicines has been prioritized by establishing new drug policies and the development of a South American health production complex to allow access to medication to vulnerable groups below the poverty line, crucial in addressing the social determinants, an ambitious aim considering the high stakes of pharmaceutical multinationals in retaining the power of monopoly pricing policies.

Although the realm is peppered with power, interests, and value conflicts, it is actually within reach. It should be noted that Argentina has strengthened its public production and Brazil is well known for its production of generic medicines. It brings together an innovative network of health ministers of member countries, academics, health specialists, and technicians with the aim of supporting and strengthening national and sub-regional capacity in the formulation, implementation, and evaluation of policies and long-term plans.

Headquartered in Rio de Janeiro, ISAGS meets the needs for training human resources in response to the targets of the 5-year plan and in response to the need to train leaders in the formulation of health policies. ISAGS leads a network of similar country-based institutions dedicated to the production of knowledge and preparation of key professionals for the management of national health systems. It is an institutional pillar to tackle issues of management and redistribution of resources in the form of human capacity for better governing of health as a regional goal as well as professionally for enhancing research and development 2 Riggirozzi, a.

ISAGS activities range from the organization of seminars, courses, internship programs, and other initiatives to improve management of health systems, to the coordination of research initiatives in support of a more autonomous pharmaceutical industry. In this respect, ISAGS seeks to identify existing industrial capacities in the region to coordinate common policies for production of medicines and other goods, advancing the industry and creating competitive advantages in global negotiation and provision for regional health.

While the Health Council essentially organizes the rules and procedures fostering relationships between actors, ISAGS acts as a regional think tank aiming to redefine boundaries between public interests and private actors and broker the ensuing tensions the technical issues. One of the first positions taken by UNASUR at the WHO was concerning the impact of intellectual property rights on access to medicines and the monopolist position of pharmaceutical companies on price setting and generics Riggirozzi, a.

What is more, for the first time, joint actions are being promoted at the PAHO and the WHO to change policies regarding representation of developing countries in the executive boards of these bodies. Yet UNASUR is especially wary of the intrusion of external donors dictating global health programs and particularly of glossy NGOs, such as the Bill and Melinda Gates Foundation, its financial muscle, and influence on the agendas of health institutions.

Even more crucially, the concern is that the WHO is ever more reliant on the priorities of such large donors and decreasingly an independent organization. One of the most salient actions of heightened health diplomacy was the cooperation with Haiti after the devastating earthquake in January Likewise, a mission also undertook an extensive vaccination against H1N1 influenza and dengue. Additional bilateral aid from Cuba, Ecuador, and Dominican Republic provided support in the form of funds, logistics, sanitation, and personnel, reinforcing the regional response.

Cooperation with Haiti has also complemented health assistance with food sovereignty and improvement of infrastructure, housing, and institutional strengthening. The Health Council also played a key role after the earthquake in Chile in All told, UNASUR promotes a movement toward horizontal cooperation and technical support, away from what its leaders view as an outmoded vertical model of donors and recipients. This is a major policy difference with former cooperation in trade-led agreements which promoted pro-market provision within countries. In such agreements health at most enjoyed a residual status; the agenda focused on sanitary security rather than health promotion as such.

Building on those stepping stones but in a more assertive political environment, UNASUR embraced health, both as integral parts of cooperation and as a part of the rights agenda.


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