TOPIC 5: HEALTH AND DEVELOPMENT

Objectives

 Describe the association between health and development

 Describe the relationship between health and economic growth

 Outline the links between health and poverty

 Understand the critical role of health in development

Issues

⚫ How health and development are related to each other?

⚫ Why is health so important?

⚫ Different indicators of health

⚫ Measurement of health and problems associated with this

⚫ Health and growth

⚫ Health expenditure and health

⚫ Social, political and regional dimensions of health

⚫ Health expenditure and health

⚫ Linkage between poverty and health

Some definitions

What is health? According to WHO

 Health is a state of complete physical, mental and social well being, and not merely the
absence of disease or infirmity.

 The health of all the people is fundamental to the attainment of peace and security and is
dependent upon the fullest co-operation of individuals and states

 The enjoyment of the highest attainable standards of health is one of fundamental rights of
every human being.
Economic growth and economic development

 These two are closely related. But economic growth is easier to measure.

What is development?

 Economic development has proved easier to recognize than to define.

 Meaning has shifted from decade to decade and at a given time has tended to mean different
things to different people (academicians, policy makers etc).

 General agreement has been concern with establishing, theoretically and practically,
conditions for a continuous increase in the welfare of human populations.

 Been significant changes in the consensus about which conditions are necessary, sufficient or
both and which aspect of welfare deserve most attention (e.g. health, education, housing etc.)

Definition of development…

 1940s-1950s: Development was seen as one of increasing market production

 Increase in physical capital was seen as the main instrument for growth

 Social indicators like health received little attention and funds.

 Very popular among economists and engineers…

In the 1960s:

 Development economist knew that material production was a necessary, but not sufficient
condition for greater welfare.

 Material production alone would take many years to improve welfare

 Thus, definition broadened to include human capital (Health and labour) and indicators of
social welfare like water, income and employment.

 During this period, there was also increased concern about the effect of development
measures on equity.

In the 1970s:

 The stage was set for versions of the development drama in which HEALTH would play a
more prominent role.

 Health professionals started making distinctive contributions towards development.

 Since then health has been a key part of development but the main shift occurred in 2000-
when Millennium Development Goals (MDGs) were introduced.

 4 out 18 development targets in MDGs are related to health.

So then what is development?

 Development is a process that implies transformations in social structure, such as

education, health, nutrition, access to housing and sanitation (qualitative change). This means
it is a qualitative change and is difficult to be measured.

 A country is enjoying economic development when it is experiencing growth and at the same
time is undergoing major structural changes, like a shift from agriculture to
manufacturing.

 Economic development is closely linked to economic growth.

What is economic growth?

 Economic growth is defined as an increase in a country‟s national income or per capita

national income over a period of years. It is the quantitative change or expansion of an
economy.

 Measured as the percentage increase in GDP or GNP over a year: A country‟s annual rate of
economic growth can be measured by taking the average percent increase in national income
over a long period (5-10 years).

 The figure obtained is the estimate of the average annual rate of growth in the country,
assuming that the rate of unemployment remains constant.

 Growth is fundamental to development and thus the advancement of human

welfare. Economic growth comes in two forms:

 Extensive growth-using more resources such as physical, natural, human capital

 Intensive growth-Using the same amount of resources more efficiently

 Economic growth is achieved through more productive use of all resources.

 It results in higher per capita income and improvement in standard of living.

 Main determinants of a country‟s rate of economic growth include:

 Growth in its labor force (enable a community to produce bigger combination of

goods and services),
  Capital stock (through net investment) and

 Technical progress (improved techniques of production, machinery etc)

NOTE: Labor force-both skilled and unskilled; Capital stock-both physical and human

capital

 Human capital is the most fundamental source of economic growth. It is a source of both
increased productivity and technological advance.

Indicators of health
 Life expectancy at birth: Number of years a new born infant would live if prevailing factors
of mortality at that time of birth were to stay the same throughout the child‟s life.

 Infant and under five mortality: Infant mortality is the probability of dying between birth
and exactly one year of age, expressed per 1000 live births, while under-five mortality rate is
the probability of dying between birth and exactly five years of age.

 Fertility rates: the number of children a woman would have by the end of her child bearing
years if she were to pass through those years bearing children.

 Crude birth and death rate: Crude birth rate is the number of births per 1000 while crude
death rate is the number of deaths per 1000.

 Nutritional status of children: Measured using height and weight

Indicators of growth/development
 Main indicator of economic development is increasing GNP per capita, reflecting an increase
in the economic productivity and average material well being of a country‟s population.

 GDP per capita

 Employment levels

 Income inequalities- gaps between the rich and the poor.

Health and growth: is there a relationship?

 Most schools of thought believe health and economic growth are intertwined.

 Health can strongly affect economic growth and economic growth can strongly
affect health
 They argue that investments in health have direct effects on productivity per unit time thus
on economic growth (healthy people worker harder, more intensely and more efficiently).

 But others argue that an expanding economy can co-exist with problems of income inequality
and poverty.

 Economic growth does not always lead to improvements in health.

 Improvements in health are not necessarily dependent on growth.

Impact of health on growth

“The biggest enemy of health in the developing world I poverty.”Kofi Annan

Direct impact on labour productivity

 Increases marginal productivity of individuals in economic activities such as the production
of goods and services-more productive, less absenteeism, higher incomes than those with
poor health.
 The marginal productivity of the time an individual works is defined as the added product of
the small additional amount of time that the individual is devoted to such work, all else being
equal.
 Direct impact of health on labour productivity is simply the change in productivity that
occurs with a change in health, all things being equal.

Indirect impact of health on labour productivity

 Marginal productivity of labour is a function of various characteristics of the individual (e.g.
cognitive capabilities, health, effort, time worked, ability), the factors of production with
which the individual works (e.g. capital stocks such as land, machinery) and the state of
technology.
 Health may affect not only direct effects on labour productivity but also indirectly if it affects
any of the other right hand variables in relation to the marginal productivity of labour
 E.g. impact of good health on cognitive development, school attendance and IQ.
Economists view health as the output of a production function
H=f(nutrition, income, education, consumption of goods and services, household size, health
care services etc.)
 Economic development affects the health of individuals by affecting inputs of the health
production function.
 Cognitive development has substantial effect on labour productivity
 Better health improves cognitive development…increase rate of return in
schooling…improved growth.
 Children with good health have higher IQ than malnourished ones, better
performance in school, increased productivity, increased growth.
Other effects of better health on economic growth
 Better health, everything being equal means that less resources are devoted to curative health
care.
 Some resource that otherwise would be used for curative care will be available for other uses
 e.g. greater current consumption or greater future consumption
 Saved and invested in physical and human resources that lead to greater health
Impact of growth on health
 State of the economy including growth changes health by affecting variables determining
health in various ways:
 Growth increases expected returns on investments in health
 The magnitude of this effect depends on the types of economic growth and related
macro policies that are pursued in relation to the amount of growth itself
 Effects on growth in health likely to be smaller if…
 Capital intensive growth strategy favouring capital investments,
 Specialised human resource targeting urban elite
 Effects on growth in health likely to be larger if…
 Directed to labour and more general investment in agriculture
 Growth increases current income and thus demand for health, for consumption goods and the
capacity to finance health investments.
 Magnitude of this impact depends on:
 Distribution of benefits of economic growth
  The more economic growth benefits the poor members of society, the
larger such effects are likely to be
 Increasing evidence that the poor do not benefit from public spending.
 Growth leads to the development of markets of various types
 Development markets increase expected productivity returns on health
 Development of markets (e.g. agriculture, labour and credit markets) increases
productivity thus investments in health
 Growth strategy that improves rural transportation and communication key
 Strategy that encourages agriculture
 Note: again depends on how access to markets is distributed (poor vs rich).
 Increase in government command over resources associated with growth depending on:
 Extent to which such resources are devoted to the health sector
 Extent to which they are allocated activities e.g. infrastructure,
 The more such resources are allocated to the health sector, the greater the impact.

Health and Growth

 Macro-economic evidence confirms that countries with the weakest conditions of health have
a much more difficult time achieving sustained growth than those with better health.
 Using standard indicators such as infant mortality rates and Life expectancy at birth, about
2/3 of international variance in health status can be related to income differences.
 Development changes not only the level of mortality, but also its structure (and presumably
also in that of morbidity).
 High mortality in poor countries reflects high prevalence of communicable diseases (e.g.
diarrhea and respiratory diseases) and the interaction of these with malnutrition.
 In rich countries, mortality from these causes is highly reduced and major causes of mortality
are chronic conditions (diabetes, hypertension) and degenerative conditions from external
causes.
 For any given initial income interval, countries with lower infant mortality rate experienced
higher economic growth during the period
 10% improvement in Life Expectancy at birth is associated with a rise in economic growth of
at least 0.3 to 0.4 percentage points per year.
 Heath status seems to explain an important part of economic growth.
Development impairs health
 Sometimes development can impair health either directly or indirectly e.g.:
 Urbanization may lower the quality of environment (overcrowding, pollution)…so
increase level of disease transmission
 The spread of schitosomiasis as unintended by-product of irrigation
 The effect of DDT use in agriculture on insecticide-resistance to mosquitoes.
 Social effects- changes in diet resulting from a shift from subsistence to cash-
farming-genetic foods-heart diseases, cancer etc.
So which way to go?
 Development affects health in a complex way. Its overall effect is to make more resources
available to deal with health problems.
 Development creates a range of possibilities out of which the most favorable should be
selected.
Synergies of Health on Education
 There are synergies between improvements in health and education
 Investments in health contribute to improved learning
 Poor children are more likely to enroll in school late, suffer frequent absence due illness,
resulting in low educational attainment.
 Ill health leads to lower cognitive development and IQ.
 Although impact of illness on cognitive development and performance in school is difficult
to measure, it is widely accepted that it can have a significant impact on levels and quality of
human capital in the future.
 In conclusion: Investment in public health, nutrition, controlling disease has “growth
enhancing effect” for economies.
Poverty and health
 Poverty is a multidimensional concept, with social, economic, cultural and political
components.
 Has many dimensions including lack of basic education, housing, social exclusion, lack of
employment, low income etc.
 Economic indicators focus primarily on income poverty, but health indicators provide a
measure of multidimensional poverty.
 Best way to analyse poverty is look at all the five types of capital:
 Human capital- (Education and health)
 Social capital- (networks)
 Physical capital- (Infrastructure)
 Natural capital- (Natural resources/ endowment)
 Financial capital- (Money aspect)
Ill health and poverty
 Poor more people are more likely to suffer from ill health. This is due to:
 Poor diet
 Lack of access to clean water, sanitation, housing
 Lack of medical care (prevention & treatment)
 Lack of information and skills etc.
 Direct loss of individuals well being:- reduces number of years of healthy life expectancy
 Effects on parental investment in children:
 High fertility, surviving number of children- leading to low investment in education,
low incomes, poverty cycle continues.
 Disease reduces returns to business and infrastructure investment
 High disease burden creates a high turnover of labour force and lowers profitability
The burden of disease on the poor
 Poor are less likely to seek medical care even when it is urgently needed: This could due to:
 greater distance to health providers
 lack of money etc.
 Costs of illness
 Direct-cash spending on treatment
 Indirect-loss of income to ill person and carers
 Tangible costs- pain and suffering
  Premature mortality
 Ill health generates poverty
 Health key asset for the poor failure to work, leads to loss of production
 Costs of treatment often unaffordable-so coping strategies –poverty trap: This is
a situation where if you are poor and fall sick, you will traped in poverty. Thus,
people adopt coping strategies with the poverty e.g. disposing assets in order to
seek/cater for health and other basic needs like food.
Poverty trap-coping strategies
 Sale of assets to meet costs of serious illnesses like HIV/AIDs and other chronic conditions
 Borrowing
 At high interest rate (money lenders, financial institutions)
 Informally-friends and neighbors
 Ignoring illness. This could possibly lead to death of main income earner
 Selling labour (on peoples farms/ other casual jobs)
 Labour reallocation. This could make children forego school to help generate income
 Using cheaper treatment alternatives which are less effective and therefore lead to
more complications
 Diversifying income
 Cultivating less land

Important books for health and development

⚫ “Human development report” UNDP
⚫ “World development report”
⚫ “Economics of development” Perkins, Radelet et al
⚫ “Development economics” Debraj Ray
⚫ “Economics and development” Barbara Ingham
⚫ “Handbook of development economics” Chenery and Srinivasan