سرمایه انسانی بهداشت و رشد اقتصادی در کشورهای جنوب صحرای آفریقا و سازمان همکاری و توسعه

This paper investigates the effects of health human capital on the growth rate of per capita income in Sub-Saharan African and OECD countries. Using an expanded Solow growth model, panel data, and a dynamic panel estimator, we find that the growth rate of per capita income is strongly and positively influenced by the stock of, and investment in, health human capital after controlling for other variables. The stock of health human capital affects the growth rate of per capita income in a quadratic way: the growth impact of health human capital decreases at relatively large endowments of health stock. Our estimates suggest that 22% and 30% of the transition growth rate of per capita income in Sub-Saharan African and OECD countries respectively, can be attributed to health. The structure of the relationship between health human capital and the growth rate of income in Sub-Saharan African countries is similar to the structure of the relationship in OECD countries. This implies that increased stocks of health human capital leads to higher steady state income. Our results have interesting policy implications.

This paper uses an an expanded Solow growth model, panel from samples of Sub-Saharan African and OECD countries, and a dynamic panel estimator (DPD) to investigate the effects of the stock of, and investment in, health human capital on the growth rate of per capita income. Specifically, we investigate whether health has a positive impact on income growth and if so whether this impact is similar in Less Developed Countries (LDCs) and developed industrial countries. Economic growth in this context should be interprted as transitional growth. While earlier researchers find that the stock of health human capital has a positive effect on income and its growth, they do not investigate the growth effects of both the stock of and investment in health in the same paper. We recognize that health affects income growth and income growth can also affect investment in health, hence we account for the possible endogeneity of investment in health human capital in our study. We also explore some mechanisms through which health human capital could affect income growth. Results of studies, such as this one, have policy implications, especially in connection with structural adjustment programs currently going on in many developing countries. An important conclusion from the modern growth literature is the importance of human capital in determining the pace and character of economic growth Barro, 1991, Benhabib & Speigel, 1994, Romer, 1990 and van Zon & Muysken, 2001. Empirical evidence supports the importance of human capital in explaining cross-country differences in economic growth (Barro, 1991, Barro & Lee, 1996 and Benhabib & Speigel, 1994; Mankiw, Romer, & Weil, 1992; Sachs & Warner, 1997). The concept of human capital is defined broadly in the economics literature to include education, health, training, migration, and other investments that enhance an individual’s productivity. However, the majority of empirical growth studies that incorporate elements of human capital focus on education as the measure of human capital. In addition to education, health has long been recognized as one form of human capital; as far back as 1842, Chadwick pointed to health expenditures as investment in human capital.2 Despite this early recognition and the importance accorded human capital in growth theory, it is only in the last decade that there has been a flurry of studies on the effect of health on economic growth in the empirical growth literature. Indeed, Temple (1999), in a survey of evidence on the “new growth” theory, could not cite any work that incorporates either the stock of, or investment in health human capital in explaining cross-country variation in growth of per capita income. The relationship between health human capital and the growth rate of income is an interesting and important topic to study for a number of reasons. First, the proportion of national income spent on health investment tends to be high; it is greater than 10% and rising in OECD countries while for LDCs, it is less than 10%, but rising at a relatively fast pace, although for Sub-Saharan African countries, the pace has slowed in the last decade. It is, therefore, necessary to investigate the growth impact of such a relatively large expenditure. Second, it is necessary to investigate the mechanisms through which health investment affects income growth in order to improve the efficiency of such investment. Third, as Schultz (1999) has argued, health is the ultimate indicator of the well being of a nation, hence the attainment of high stocks of health is an important aspect of development in its own right. Fourth, the growth impact of the HIV/AIDS epidemic in Sub-Saharan Africa makes the relationship between health and economic growth timely. Finally, it is necessary to investigate the relationship between health investment and expenditures in other sectors of the economy, such as investment in physical capital to test whether health investment complements or substitutes for these expenditures. Our study contributes to the growing literature on the effect of health human capital and economic growth. Although there has been a recent upsurge in studies that investigate the relationship between health and economic growth in the empirical growth literature, none of these studies has employed a dynamic panel estimator that produces consistent estimates in the presence of dynamics and endogenous regressors. Most of the recent studies that are based on panel data have used either the Fixed Effects (FE) or the Random Effects (RE) estimator, estimators that are inappropriate in the presence of dynamics (Baltagi, 1995). We also use two alternative measures of health, child mortality rates and life expectancy, in our study to ensure that our results are not dependent on the measure of health we use. Finally, our study compares the growth effect of health in Sub-Saharan African countries and OECD countries; two sets of countries that are vastly different in income levels and economic structures. If the growth effect is similar in the two sets of countries that have large differences in income levels, economic structures, institutions, as well as tastes, then we can have more confidence in our results than we would if we had conducted the analysis for either developed or developing countries alone. This study merges the ideas of two well-established research areas—economic growth and health economics. The economic growth literature suggests that accumulation of health and other forms of human and physical capital increases the level of per capita income through increased productivity of existing resources as well as increased resource accumulation and technical change. Part of the increased income is spent on investment in human capital, which induces further income growth. The health economics literature indicates a positive effect of income on expenditure on health care. This suggests that health human capital investment and income growth are jointly determined. Fogel (1994) argues that about a third of income growth in Britain between 1790 and 1980 can be attributed to improvements in health and that nutrition, public health, and medical care should be considered as labor-enhancing technological change. Health can affect income growth through increased effort and productivity of human resources, and also through increased investment in both human and physical capital (Bhargava, Jamison, Lau, & Murray, 2001). The health, education, and growth relationship is dynamic and complementary; health capital increases the efficiency with which individuals produce education, and presumably, other forms of human capital. Indeed, Hanushek and Dongwook (1995) and Schultz (1999) suggest that health improves an individual’s mental and intellectual capabilities, leading to better educational outcomes. Given that long-term growth is fueled by technical progress—itself the product of increased health, education, and training—increased health can raise the growth rate of income through technical innovation. At the micro level, several studies show a strong link between health human capital and labor productivity. Schultz and Tansel (1993) connect the stock of health human capital to labor productivity in Côte d’Ivoire and Ghana. Similarly, Chirikos and Nestel (1985) find that poor health reduces both wage rates and hours of work in the United States. Haveman and Wolf (2000) summarize a number of studies that show that disabilities lower labor force participation rates, wages, and hours of work. We focus on Sub-Saharan Africa and and OECD countries for a number of reasons. The World Development Report, 1993 suggests that improved health in LDCs will increase the growth rates of incomes in these countries. However, Structural Adjustment Programs (SAPs) in Sub-Saharan African countries often lead to reductions in health investment. Quantifying the growth effects of health in Sub-Saharan African countries could give policy makers an idea about the trade-offs between short term stabilization and long-term income that such spending priorities entail. Second, few studies have examined the link between health and income growth in Sub-Saharan African countries. This study attempts to fill this gap in the literature. Third, we will like to know if the relationship between health and income growth in Sub-Saharan Africa holds for high income countries as well, hence we compare the results from Sub-Saharan African countries where the stocks of health human capital and income levels are very low with estimates from OECD countries where incomes and the stocks of health human capital are relatively high. Fourth, we would like to compare the growth impact of health in Sub-Saharan Africa where HIV/AIDS epidemic is putting serous strain on growth resources to the growth impact of health in OECD countries where the effect of the epidemic is less severe. Finally, we would like to compare the growth impact of health in Sub-Saharan Africa where resources devoted to health care have decreased in the last decade to that of OECD countries where the proportion of GDP devoted to health care has been increasing. Our contribution to the literature is five-fold. First, we use an expanded neoclassical growth model that includes both education and health human capital as regressors in our investigation. Although our emphasis is on the effects of the stock of health human capital on the growth rate of per capita income, we recognize that additions to this stock are endogenous. Our second contribution, therefore, is that we investigate the effects of both the stock of and investment in health human capital on economic growth. Third, we allow the marginal growth effect of health human capital stock to change with the stock of health human capital. Fourth, we use panel data and a dynamic panel estimator that allows us to account for endogeneity as well as dynamic effects of health investment to estimate the relationship. Finally, we compare the growth effects of health human capital in Sub-Saharan Africa and OECD countries, something that has not been done by earlier researchers. We believe that using the same approach to investigate the effects for both Sub-Saharan African countries and OECD countries will provide a good general test of these relationships. We find that both the stock of, and investment in, health human capital have positive and statistically significant effects on the growth rate of per capita income in both Sub-Saharan African and OECD countries after controlling for other factors that affect income growth. A unit increase in investment in health is directly associated with about 0.1% and 0.05% increase in the transition growth rate of per capita income in Sub-Saharan African and OECD countries respectively. Based on our estimates, we calculate that about 22% and 30% of annual income growth in Sub-Saharan African and OECD countries respectively can be attributed to health. The results indicate that increased investment in health human capital increases the level of steady state per capita income directly and indirectly through increases in physical capital accumulation. We find that the growth effect of the stock of health human capital is subject to diminishing marginal returns in both Sub-Saharan African and OECD countries. We conclude that investment in health human capital is an important factor contributing to economic growth in the transition and higher steady state income levels. Our results are consistent with both empirical growth and health economics literatures and with the results of earlier researchers who find a positive relationship between health and income growth ( Barro, 1991, Barro, 1996, Barro & Lee, 1994, Barro & Sala-I-Martin, 1995, Bhargava et al., 2001, Fogel, 1994, Gallup & Sachs, 2000, Knowles & Owen, 1995 and Knowles & Owen, 1997; Mayer, 2001a and Mayer, 2001b; Sachs & Warner, 1997 and Weil, 2001). The rest of the paper is organized as follows: In Section 2, we briefly review the literature on the relationship between health and income growth, and present a growth model that endogenizes investments in health human capital and physical capital. A description of the data and the econometric strategy for estimating the dynamic panel growth model follow in Section 3. Section 4 presents and discusses the statistical results while Section 5 concludes the paper.

The primary purpose of this paper is to investigate the effect of health human capital on the growth of per capita income. We use an expanded Solow growth model, panel data, and a dynamic panel estimator to investigate this relationship in samples of OECD and Sub-Saharan African countries. We find that the stock of health human capital has positive and statistically significant effect on the growth of per capita income in both samples. This positive effect is quadratic: increases in health human capital increases the growth of per capita income but the marginal effect eventually diminishes. Our results suggest that cross-country differences in incomes are positively correlated with cross-country differences in the stocks of health human capital. More gratifying is our finding that current investment in health human capital is positively correlated with the growth of per capita income in both OECD and Sub-Saharan African countries. Our results that the stock of health human capital has positive direct effect on per capita income level has implications for growth research and growth policy. The policy implications are that nations that desire high levels of per capita income can do so by increasing the stock of health human capital, particularly if their current stocks are low. For LDCs with low stocks of health human capital, this conclusion is interesting given that investment in health human capital neither decreases income growth nor physical capital investment in the short term. The implications of these findings is that additional health investments in Sub-Saharan African nations will increase economic growth in the short run and the level of income in the long run as health investments become part of the nations’ stocks of human capital. From a research perspective, our results imply that the stock of health human capital and investment in health human capital should be included in growth equations as added regressors. However, our results should be interpreted with caution. In particular, our model assumes that the depreciation rate of health capital is constant. If the rate of depreciation of health capital is related to the level of health in a non-linear way, the growth impact of health may be different from the effects we have estimated here. We leave that investigation for a future project.