A contribution to the health-growth empirics on Africa

Taiwo, Kayode (2018): A contribution to the health-growth empirics on Africa. Published in: Akungba Journal of Economic Thought , Vol. 12, No. 1 (2020): pp. 43-55.

Abstract

Africa faces significant health-related challenges due to the high level of morbidity in the continent. These challenges ruin productivity and hinder economic growth. This paper investigates the effect of health on economic growth using two health variables: life expectancy and infant mortality. The study covers the period 1975 to 2015 and uses both cross-sectional and panel regressions in econometric estimation. Under both methods of estimation, the study establishes a conditional convergence for African economies. The health variables have statistically significant effects on economic growth under both static and dynamic panel regressions, though we emphasise the results obtained under the dynamic panel method. The results indicate raising life expectancy can significantly spur growth, while infant mortality can slow down economic growth. Our results suggest that countries in the North-African subregion do not enjoy higher growth on account of health. On the policy side, this study suggests that governments in Africa should invest more in health to improve economic growth.

• Item Type: MPRA Paper
• Language: English
• Keywords: Life expectancy, Infant mortality, Economic growth, Panel data, Africa
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C21 - Cross-Sectional Models ; Spatial Models ; Treatment Effect Models ; Quantile Regressions; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models; I - Health, Education, and Welfare > I1 - Health > I15 - Health and Economic Development

References

Acemoglu, D., & Johnson, S. (2007). Disease and development: the effect of life expectancy on economic growth. Journal of Political Economy, 115(6), 925-985.

Arellano, M., & Bond, S. (1991). Some tests of the specification for panel data: Monte Carlo evidence and an application to employment equations. The Review of Economic Studies, 58(2), 277-297.

Arellano, M., & Bover, O. (1995). Another look at the instrumental variable estimation of error-components models. Journal of Econometrics, 68(1), 29-51.

Barro, R. J. (2013). Health and economic growth. Annals of Economics and Finance, 14-2(A), 305-342.

Barro, R. J., & Sala-i-Martin, X. (2004). Economic Growth, 2nd ed. Cambridge, MA: The MIT Press.

Bhargava, A., Jamison, D. T., Lau, L. J., & Murray, C. J. L. (2001). Modelling the effects of health on economic growth. Journal of Health Economics, 20, 423-440.

Bloom, D. E., Canning, D., & Sevilla, J. (2004). The effect of health on economic growth: a production function approach. World Development, 32 (1), 1–13.

Bloom, D. E., & Canning, D. (2008). Population Health and Economic Growth. Commission on Growth and Development Working Paper; No. 24.

Bloom, D. E., Kuhn, M., & Prettner, K. (2018). Health and economic growth. IZA Discussion Paper No. 11939.

Blundell, R., & Bonds, S. (1998). Initial conditions and moment restrictions in dynamic panel models. Journal of Econometrics, 87(1), 115-143.

Caselli, F., Esquivel, G., & Lefort, F. (1996). Reopening the convergence debate: a new look at the cross-country growth empirics. Journal of Economic Growth, 1, 363-389.

Cooray, A. (2013). Does health capital have differential effects on economic growth? Applied Economic Letters, 20, 244-249.

Deaton, A.S. (2003). Health, inequality, and economic development. Journal of Economic Literature, 41(4), 113–158.

Dube, W. & Phiri, A. (2014). Nutrition and economic growth in South Africa: a threshold co-integration approach. Journal of Economic Studies, 44(1), 138-156.

Frimpong, P. B. & Adu, G. (2014). Population health and economic growth in Sub-Sahara Africa: a panel co-integration analysis. Journal of African Business, 15(1), 36-48.

Gallup, J.L. & Sachs, J. (2001). The economic burden of malaria. American Journal of Tropical Medicine and Hygiene, 64 (1), 85–96.

Gygli, S., Haelg, F., Potrafke, N., & Sturm, J. (2019). The KOF Globalisation Index – Revisited. Review of International Organisation, 14(3), 543-574.

Islam, N. (1995). Growth empirics: a panel data approach. The Quarterly Journal of Economics, 110(4), 127-1170.

Knight, M., Loayza, N. & Villanueva, D. (1993). Testing the neoclassical theory of economic growth: a panel data approach. IMF Economic Review, 512–541.

Loayza, N.V. (1994). A test of the international convergence hypothesis using panel data. The World Bank Policy Research Working Paper No. 1333.

Lucas, R. E. Jr. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22, 3-42.

Mayer, D. (2001). The long-term impact of health on economic growth in Latin America. World Development, 29(6), 1025-1033.

Onarheim, K. H., Iversen, J. H., & Bloom, D. E. (2016). Economic benefit of investing in women’s health: A systematic review. PloS One, 11(3), 1-23.

Piabuo, S. M., & Tieguhong, J. C. (2017). Health expenditure and economic growth-a review of the literature and an analysis between the economic community for central African states (CEMAC) and selected African countries. Health Economics Review, 7(1), 1-13.

Roadman, D. (2009a). A note on the theme of too many instruments. Oxford Bulletin of Economics and Statistics, 7(1), 135-158.

Roadman, D. (2009b). How to do xtabond2: An introduction to difference and system GMM in STATA. The Stata Journal, 9(1), 86-136.

Romer, P. M. (1986). Increasing returns and long-run growth. Journal of Political Economy, 94(5), 1002-1037.

Thompson, M. (2008). Generating economic growth: an analytical survey. The Open Economics Journal, 1, 25-36.

Sachs, J. D. (Ed.) (2001). Macroeconomics and Health: Investing in Health for Economic Development. Geneva, Switzerland: World Health Organization.

Solow, R. M. (1957). Technical change and the aggregate production function. The Review of Economics and Statistics, 312-320.

StataCorp. (2017). Stata statistical software: Release 15. College Station, TX: StataCorp LLC.

Swan, T. W. (1956). Economic growth and capital accumulation. Economic Record, 32(2), 334-361.

Swift, R. (2011). The relationship between health and GDP in OECD countries in the very long run. Health Economics, 20, 306-322.

Weil, D. N. (2014). Health and economic growth. In Handbook of economic growth (Vol. 2, pp. 623-682). Elsevier.

Windmeijer, F. (2005). A finite sample correction for the variance of linear efficient two-step GMM estimators. Journal of Econometrics, 126(1), 25-51.

World Bank. (2014). The economic impact of the 2014 Ebola epidemic: Short- and medium-term estimates for West Africa. Washington, D.C.: World Bank.