Is Health Trade of Mode 3 in Public Health Care Gainful?

This paper attempts to analyze the aspect of public health care in the context of increasing globalization. This paper examines the importance of health trade through mode 3 of General Agreement on trade in services (GATS) in the presence of a public funding health care. For that purpose the paper develops a static three sector general equilibrium trade model of a small open economy where health sector is defined as a public subsidized health care. Evidence shows that trade liberalization in the form of an increase in foreign health capital inflow leads to an expansion of public health care. This paper also shows that health trade through commercial presence may deteriorate the wage inequality. Apart from that in this study we have shown that the level of welfare of the small open economy increases due to trade in health services of mode 3.