the ability to expend either mental or physical effort while at work. Health will
contribute to human capital formation through increasing school attendance
and on-the-job learning at work, so increasing productivity. There is also some
evidence that FDI will be attracted to countries with better health facilities.
These links are shown in Figure 6.1.
From growth to education and health
Although the main focus of this chapter is how education and health impact
economic growth the pattern of reverse causation is also important. Growth in
general promotes both education and health, so a virtuous circle between
economic growth and human development is at least theoretically possible.
The causal mechanism, however, is complicated and uncertain.
Across a broad cross-section of countries higher income per capita is asso-
ciated with lower infant mortality and higher life expectancy. There is strong
evidence that the positive relationship between income and health is causal,
such that ‘wealthier nations become healthier nations’. A study shows that
differences in country growth rates over three decades explain roughly 40 per
cent of the cross-country differences in mortality rate (Pritchett and Summers,
1996). Growth was also found to strongly positively impact on child malnutri-
tion in a study of weight-for-age data based on food consumption in 12 coun-
tries and aggregate data from 61 developing countries (Haddad et al., 2003).
There are of course outliers. Child malnutrition rates, for example, are little
different in Kenya and South Africa despite the latter having GDP per capita
eight times higher than the former.
It is likely that GDP growth improves health directly and indirectly via
increased public and private/household spending on goods that directly/indi-
rectly improve health. Evidence using inter-country comparisons shows that
GDP growth leads to increased life expectancy, mainly through its impact on
the incomes of the poor and also by raising resources and enabling public
health expenditure to increase (Anand and Ravallion, 1993). There is,
however, no guarantee that the resources created by economic growth will be
funnelled by the government into public services rather than infrastructure for
business or imported consumer goods for urban elites. In some countries
(South Korea and Hong Kong) resources generated by economic growth were
invested in health inputs, so life expectancy increased rapidly. In other coun-
tries (Brazil) similarly rapid economic growth was not so closely associated
with more health inputs and life expectancy rose more slowly. This finding also
raises the possibility that governments or households can increase spending on
health inputs even at low incomes. The low cost of vaccinations and the low
wages of the nurses who administer them have enabled some poor developing
countries (Sri Lanka,pre-reform China, and Costa Rica) to achieve very rapid
reductions in mortality without much economic growth. An interesting finding
here is that almost all of China’s post-1945 reduction in infant mortality
Education and Health 121