The Health and Wealth of Nations

Citation: Bloom, Canning The Health and Wealth of Nations. Science (RSS)
Internet Archive Scholar (search for fulltext): The Health and Wealth of Nations
Tagged: uw-madison (RSS), wisconsin (RSS), sociology (RSS), demography (RSS), prelim (RSS), qual (RSS), WisconsinDemographyPrelimAugust2009 (RSS), international development (RSS)

Summary

The positive correlation between health and income per capita is one of the best-known relations in international development. This correlation is commonly assumed to reflect a causal link running from income to health. Recently, however, another possibility has emerged: that the health-income correlation is partly explained by a causal link running from health to income. The mechanisms that could account for this relationship are: (1) productivity healthier populations tend to have higher labor productivity; (2) education healthier people who live longer have stronger incentives to invest in developing their skills, also good health promotes school attendance and enhances cognitive function; (3) improvements in physical capital improvements in longevity create a greater need for people to save for their retirement, also a health population can lead to increased foreign investment; and (4) "demographic dividend" in the demographic transition, mortality declines are initially concentrated in the young and trigger subsequent declines in fertility, an initial surge in the numbers of young dependents gradually gives way to an increase in the proportion of the population that is of working age (as this happens, income per capita can rise dramatically, provided the broader policy environment permits the new workers to be absorbed into productive employment).

Recent economic analysis indicates that health status (measured as life expectancy) has a significant, consistent, and large effect on subsequent economic growth. The authors argue that as these health improvements strengthen the economy, they also alleviate poverty.

There is also evidence that, apart from increases in life expectancy, health improvements operate via demographic change to yield economic growth. The authors identify health improvements in East Asia from 1965 to 1990 as increasing the working-age population and thereby accounting for perhaps one-third of its "economic miracle."

In contrast, poor health can slow the demographic transition and inhibit growth, for example, in sub-Saharan Africa.

Patterns of energy use also mediate the interactions between health, demography, and income. For example, the rural poor in some areas rely on burning wood, dung, etc, for energy resulting in smoke and particulates that have deleterious health consequences and, therefore, diminish people's productivity. The development process is inherently dynamic with health improvements promoting economic growth, which in turn promotes better health. This "virtuous spiral" can transform an impoverished, disease-prone country into one that offers its people a much higher quality of life.

Health improvements and economic growth can be mutually reinforcing in another way. As rising incomes cause fertility to decline, there are consequent benefits to the health of mothers and children, via longer breast-feeding, less stress on women's reproductive systems, more opportunities for them to work outside the home, and increased resources for each child's upbringing. In turn, fertility declines promote economic growth by allowing societal resources to be devoted to urgently needed investments in physical capital, infrastructure, and educational quality.

The mutual reinforcement between health and income can also operate in reverse, as in the case with HIV/AIDS in sub-Saharan Africa and political instability in Russia.

This perspective offers a new possibility in international development: investing in health to help stimulate development.