There is also scope for greater innovation through ICT investments. Enlisting several examples of digitalization in European health care services, Lapão and Dussault (2017) find that e-records and e-prescriptions make it possible for clinicians to be more productive by allowing easier access to information and reducing paperwork. The same holds true for investments in labor-augmenting intangible capital such as software, big-data analytics, and branding, which have also enabled hospitals and schools to standardize and codify best practices and scale production over many locations. Gawande (2012) provides the example of hospitals in the United States, of which more than 60 percent are owned by for-profit chains or are part of a large network owned by an academic institution. The Steward Health Care Group, for instance, has used the “remote ICU” to provide consistent care in all the intensive care units (ICUs) in its hospitals and has adopted a common medical data platform in all its hospitals and outpatient clinics. By 2019, Steward had expanded from its 6 original hospitals in Boston to 38 hospitals and 271 outpatient clinics in 10 states and Malta. This franchising model can also be exported through foreign direct investment (FDI) that establishes affiliates abroad. FDI from high-income countries, especially for health services, increased considerably between 2005 and 2017 (figure 3.16, panel b).
FIGURE 3.16 High-Income Countries Have Consistently Increased Their Exports of Skill-Intensive Social Services, Especially through FDI a. Exports of education and health services from high-income countries through cross-border supply (mode 1), 2005–17a
b. Exports of education and health services from high-income countries through establishment of foreign affiliates (mode 3), 2005–17b 45,000 40,000
2,500
35,000 FDI (US$, millions)
Cross-border exports (US$, millions)
3,000
2,000 1,500 1,000
25,000 20,000 15,000 10,000
500 0 2005
30,000
5,000 2010
2017 Education
0 2005
2010
2017
Health care
Source: Trade in Services data by Mode of Supply (TiSMoS) database, World Trade Organization (WTO). Note: The service delivery “modes” refer to the classification of services trade applied in the WTO General Agreement on Trade in Services (GATS), as further described in chapter 1. FDI = foreign direct investment. a. Mode 1 is “cross-border supply,” whereby a provider delivers services to a customer in another country without any movement of persons or commercial presence, including through digital delivery. b. Mode 3 is “commercial presence” or FDI, whereby a provider delivers services through its presence in the customer’s country, such as through a locally established subsidiary or affiliate company.
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At Your Service? The Promise of Services-Led Development
