Health systems in developing countries are facing major challenges in the 1990s and beyond because of a growing epidemiological diversity as a consequence of rapid economic development and declining fertility. The infectious and parasitic diseases of childhood must remain a priority at the same time the chronic diseases among adults are emerging as a serious problem. Health policymakers must engage in undertaking an epidemiological and economic analysis of the major disease problems, evaluating the cost-effectiveness of alternative intervention strategies; designing health care delivery systems; and, choosing what governments can do through persuasion, taxation, regulation, and provision of services. The World Bank has commissioned studies of over two dozen diseases in developing countries which have confirmed the priority of child survival interventions and revealed that interventions for many neglected and emerging adult health problems have comparable cost-effectiveness. Most developing countries lack information about most major diseases among adults, reflecting lack of national capacities in epidemiological and economic analyses, health technology assessment, and environmental monitoring and control. There is a critical need for national and international investment in capacity building and essential national health research to build the base for health policies.