Health and Economic Growth

Since the mid 1980s, research on economic growth has experienced a boom, beginning with the work of Romer (1986). The new “endogenous growth” theories have focused on productivity advances that derive from technological progress and increased human capital in the form of education. Barro and Sala-i-Martin (1995) explore these theories and also discuss extensions to allow for open economies, diffusion of technology, migration of persons, fertility choice, and variable labor supply. The government can be important in the models in terms of its policies on maintenance of property rights, encouragement of free markets, taxation, education, and public infrastructure. One area that has received little attention in the recent literature on growth theory is the two-way interplay between health and economic growth. Two preliminary efforts in this direction are Ehrlich and Lui (1991) and Meltzer (1995). Also, the empirical work of Barro (1996) and others suggests that health status, as measured by life expectancy or analogous aggregate indicators, is an important contributor to subsequent growth. In fact, initial health seems to be a better predictor than initial education of subsequent economic growth. The main purpose of this study is to apply the spirit and apparatus of the recent advances in growth theory to the interaction between health and growth. The analysis is conceptual and is intended to form the basis for further theorizing and for empirical analyses of the joint determination of health and growth. The discussion begins with a survey of existing theories and empirical evidence on the determinants of economic growth. Then the paper develops models of the interplay between health and growth.