retirement, so increasing the pool of resources available for investment. The
latter effect is likely to be temporary as the saving boom lasts one generation
and will then be offset by the consumption needs of the elderly once popula-
tion aging occurs. FDI is more likely in environments where the labour force
has good health. Endemic diseases can deny humans access to land or other
natural resources as occurred in much of West Africa prior to the successful
control of river blindness (see Chapter 11 on the disease impact of tropical
geography). Healthier children have higher rates of school attendance and
improved cognitive development. An adult’s illness may result in the poor
health or death of a previously healthy child due to a decline in care or reduced
family income.
Evidence from cross-country growth regressions suggests that the initial
health of a population is a large and robust driver of economic growth. One
extra year of life expectancy has been estimated to raise long-term GDP per
capita by about 4 per cent. There will also be feedback effects if the higher
incomes resulting from better health are invested in health-augmenting inputs
such as more regular medical care. For any given initial income level, countries
with lower infant mortality rates in 1965 experienced higher economic growth
between 1965 and 1994 (CMH, 2001:23).
The health–wealth relationship holds even in developed countries. In the
US across all age groups in 1984 those in excellent health had 74 per cent more
wealth than those with fair or poor health. It is not clear, however, whether
healthier households are wealthier because higher incomes lead to better
health or whether poor health restricts a family’s ability to accumulate assets
through paid employment or because of rising medical expenses. There is
evidence that the impact of new and severe health problems on savings is
significant; the average wealth reduction is about US$17,000 or 7 per cent of
household wealth. Medical expenses (most of which are insured) were not the
leading cause of wealth loss which was more closely related to its impact on
labour supply and expenditures associated with illness such as transport and
care arrangements which are typically not reimbursed by insurers (Smith,
1999).
Chapter 11 looks at the incidence of malaria as a problem of geography,
specifically as a health issue. The average income of countries without inten-
sive malaria was five times higher than those with and between 1965 and 1990.
GDP growth was 2.3 per cent in countries without intensive malaria, 0.4 per
cent in countries with. A number of growth accelerations can be dated from the
eradication of malaria, including Greece, Italy and Spain from the early 1950s,
Taiwan in 1961, Jamaica 1958 and the southern US from the 1950s (Gallup
and Sachs 1999). A malarial index has a strong negative association with
income levels even after controlling for other determinants of income (Gallup
and Sachs 2000). Unlike other important diseases such as TB and diarrhoea
(linked to inadequate sewage, unsafe drinking water, and substandard hous-
ing), malaria is not so clearly a direct consequence of poverty, its extent and
severity is more strongly determined by climate and ecology. The mechanism
Education and Health 133