FDI in Healthcare

  • Sarbajit Chaudhuri
  • Ujjaini Mukhopadhyay


The healthcare sector has historically been publicly funded in developing countries due to commitments of governments to provide universal access to health services at low cost. A major part of the empirical literature on FDI in healthcare is analytical in nature, with an apparent polarization of views for and against FDI. However, empirical evidence on the likely impact of FDI in health service is virtually non-existent. In this chapter, we formally investigate the effects of FDI in the healthcare sector on the welfare and human capital formation of a developing economy in terms of a three-sector, full-employment general equilibrium model with a non-traded sector that produces healthcare services the consumption of which directly raises the efficiency of the workers. The results of the analysis indicate that although FDI of the type which is specific to the healthcare sector raises the human capital endowment of the economy, it may adversely affect social welfare. On the contrary, FDI of the other type which is used in all the sectors of the economy is likely to be welfare improving under reasonable conditions. These results question the desirability of allowing entry of foreign capital in the healthcare sector that generates externalities.


Foreign Direct Investment National Welfare Healthcare Service Foreign Capital Healthcare Sector 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Springer India 2014

Authors and Affiliations

  • Sarbajit Chaudhuri
    • 1
  • Ujjaini Mukhopadhyay
    • 2
  1. 1.Department of EconomicsUniversity of CalcuttaKolkataIndia
  2. 2.Department of EconomicsBehala CollegeKolkataIndia

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