Economic Growth and Development

emerges when the three poor countries (Afghanistan, Burkina Faso and
Ethiopia) are compared with three developed countries (Sweden, Switzerland
and the United States).
These health inequalities have been narrowing, even as income gaps
between developed and developing countries have been widening. Table 1.3
(see p. 29) showed that the difference in life expectancy between the developed
West and the rest of the world was zero in 1000 CE, reached a peak of 22 years
in 1950 and declined to 15 years by 2002.

Education,health and economic growth

Education affects growth through its impact on labour as a factor of produc-
tion. Time spent in formal education reduces the labour supply, particularly of
young people. Education is also linked to fertility, mortality and migration
which will influence the quantity of labour through demography. Educated
workers are likely to be more productive themselves and will make it easier for
productivity-enhancing technology (likely to need skilled labour) to diffuse
throughout an economy. Education may also have indirect impacts on growth,
for example through public debate and discussion that improve the functioning
of democracy and hence the quality of gov ernment policy-making, which many
argue will have a positive impact on productivity. FDI may be attracted to
countries offering investors a higher stock of human capital, and technological
spillovers from FDI are then likely to be higher in countries with a better stock
of education. Health has very similar impacts. A healthier labour force will
increase the effective labour supply by reducing time off work and increasing

120 Sources of Growth in the Modern World Economy since 1950

GDP growth

Investment Labour supply/population Productivity(TFP)

Education and

health

Figure 6.1 Education, health and economic growth