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48739 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Health andGrowth MaureenLewis Michael Spence 48739 Editors Health and Growth Commission on Growth and Development Health and Growth Edited by Michael Spence and Maureen Lewis Contributions by Michael Spence Daron Acemoglu and Simon Johnson Sir George Alleyne Jere R. Behrman Hoyt Bleakley David E. Bloom and David Canning William Jack and Maureen Lewis COMMISSION ON GROWTH AND DEVELOPMENT © 2009 The International Bank for Reconstruction and Development / The World Bank On behalf of the Commission on Growth and Development 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org www.growthcommission.org E-mail: [email protected] [email protected] All rights reserved 1 2 3 4 12 11 10 09 This volume is a product of the Commission on Growth and Development, which is sponsored by the following organizations: Australian Agency for International Development (AusAID) Dutch Ministry of Foreign Affairs Swedish International Development Cooperation Agency (SIDA) U.K. Department for International Development (DFID) The William and Flora Hewlett Foundation The World Bank Group The fi ndings, interpretations, and conclusions expressed herein do not necessarily refl ect the views of the sponsoring organizations or the governments they represent. The sponsoring organizations do not guarantee the accuracy of the data included in this work. The boundaries, colors, denomi- nations, and other information shown on any map in this work do not imply any judgment on the part of the sponsoring orga- nizations concerning the legal status of any territory or the endorsement or acceptance of such boundaries. All queries on rights and licenses, including subsidiary rights, should be addressed to the Offi ce of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: [email protected]. ISBN: 978-0-8213-7659-1 eISBN: 978-0-8213-7660-7 DOI: 10.1596/978-0-8213-7659-1 Library of Congress Cataloging-in-Publication Data Health and growth / edited by Michael Spence and Maureen Lewis. p. cm. Includes index. ISBN 978-0-8213-7659-1 — ISBN 978-0-8213-7660-7 (electronic) 1. Medical economics. 2. Medical care—Finance. 3. Public health administration. I. Spence, Michael, 1943- II. Lewis, Maureen A., 1952- RA410.H37 2009 338.4'33621—dc22 2009005640 Contents Preface ix Workshop Participants xv About the Editors and Contributors xvii Acknowledgments xxi Abbreviations xxiii 1 Health Investments and Economic Growth: Macroeconomic Evidence and Microeconomic Foundations 1 William Jack and Maureen Lewis 2 Health and Economic Growth: Policy Reports and the Making of Policy 41 Sir George Alleyne 3 Population Health and Economic Growth 53 David E. Bloom and David Canning 4 Disease and Development: The Effect of Life Expectancy on Economic Growth 77 Daron Acemoglu and Simon Johnson Contents v 5 Disease and Development: Evidence from Hookworm Eradication in the American South 131 Hoyt Bleakley 6 Early Life Nutrition and Subsequent Education, Health, Wage, and Intergenerational Effects 167 Jere R. Behrman Index 185 Figures 1.1 Health Improvements and the Advent of Barefoot Doctors in China 6 1.2 The Preston Curve, 2001 8 1.3 Normalized Cross-Country Standard Deviations of Health and Income, 1960–2004 9 1.4 Income Growth and Infant Mortality Rate Reductions in China and India, 1960–2000 10 1.5 Cognitive or Schooling Defi cits Associated with Moderate Stunting in Children Less Than Three Years Old from Six Longitudinal Studies 19 1.6 Returns to Different Levels of Education Based on Family Background 20 1.7 Returns to Different Levels of Education and Family Background 20 1.8 Absentee Rates among Health Workers in Select Countries, 1989–2003 29 2.1 Tons of Ore Mined per Worker per Day, 1923 43 2.2 Relationship between Output per Worker and Nutritional Status in Denmark 46 2.3 Growth Rate of Income per Capita, 1965–94 46 2.4 Age-Adjusted Death Rate per 100,000 Population from Diabetes in Caribbean and North American Countries, 2000 48 3.1 Income and Life Expectancy, 2005 55 3.2 Population in Sub-Saharan Africa, by Age, 1960–2040 62 3.3 Population in East Asia, by Age, 1950–2060 62 4.1 Log Life Expectancy at Birth for Initially Rich, Middle-Income, and Poor Countries, Base Sample 79 4.2 Log GDP per Capita for Initially Rich, Middle-Income, and Poor Countries, Base Sample 80 4.3 Change in Log Life Expectancy and Change in Predicted Mortality, 1940–80, Base Sample 99 vi Contents 4.4 Change in Log Life Expectancy and Change in Predicted Mortality, 1940–80, Low- and Middle-Income Countries 100 4.5 Change in Log Life Expectancy, 1900–40, and Change in Predicted Mortality, 1940–80, Base Sample 106 4.6 Change in Log Life Expectancy, 1930–40, and Change in Predicted Mortality, 1940–80, Base Sample 106 4.7 Change in Log of Population and Change in Predicted Mortality, 1940–80, Base Sample 109 4.8 Change in Log of Total GDP and Change in Predicted Mortality, 1940–80, Base Sample 112 4.9 Change in Log Life Expectancy at Age 20 and Change in Predicted Mortality, 1940–80, Base Sample 118 5.1 Hookworm Infection Rates Before and After Treatment at the State Level in Select Southern States and at the County Level in Alabama 138 5.2 Hookworm Eradication and School Attendance, 1870–1950 143 5.3 Cohort-Specifi c Relationship between Income and Pre-eradication Hookworm 152 Tables 2.1 Median Wealth by Self-Reported 1984 Health Status 44 2.2 Early Nutrition and Future Earnings 47 2.3 Possible Economic Burden from Diabetes and Hypertension in Caribbean Countries 49 3.1 Regional Time Trends in Adult Height, Infant Mortality, and Nutrition, 1961–85 64 3.2 Annual Growth Rate of Per Capita Income, by Income per Capita and Infant Mortality Rate (1960), 1960–2000 65 3.3 Prevalence of Preventable Neglected Diseases, by Region 68 4.1 Descriptive Statistics 90 4.2 Life Expectancy, Population, Births, and Percent of Population Under 20: OLS Estimates 92 4.3 Life Expectancy, GDP, GDP per Capita, and GDP per Working-Age Population: OLS Estimates 93 4.4 The Effect of Interventions on Disease Mortality: Zeroth Stage 98 4.5 Predicted Mortality and Life Expectancy: First-Stage Estimates 101 4.6 First-Stage Estimates: Mean Reversion and Robustness 104 4.7 Falsifi cation Exercise and Reduced Forms 107 4.8 The Effect of Life Expectancy on Population, Total Births, and Population under Age 20: 2SLS Estimates 110 Contents vii 4.9 The Effect of Life Expectancy on GDP, GDP per Capita, and GDP per Working-Age Population: 2SLS Estimates 113 4.10 The Effect of Life Expectancy at Age 20 on Population, Total Births, GDP, and GDP per Capita: 2SLS and First-Stage Estimates 117 4A.1 Key Data for Base Sample 122 5.1 Summary Statistics 140 5.2 Hookworm and Human Capital: Basic Results 142 5.3 Hookworm and Human Capital: Sensitivity Tests and Results for Subgroups 145 5.4 Contemporaneous Effect on Adult Outcomes 147 5.5 Long-Term Follow-up Based on Intensity of Exposure to the Treatment Campaign 149 5.6 Exposure to RSC Versus Alternative Time-Series Relationships 154 6.1 Select Associations between Maternal and Infant Anthropometric Measures and Adult Outcomes 169 6.2 Effects of Exposure in the First Three Years of Childhood to Atole Relative to Fresco Nutritional Supplements on Guatemalan Adults Age 25–42 and on Their Offspring 175 6.3 Estimated Present Discounted Values of Seven Major Benefi ts of Moving One Infant from Low Birth Weight, at Different Discount Rates 178 6.4 Estimated Global Benefi t-Cost Ratios for Opportunities Related to Hunger and Malnutrition 180 6.5 Project Rankings in 2004 Copenhagen Consensus 181 viii Contents Preface The Commission on Growth and Development was established in April 2006, partly in response to two observations. We felt that the benefi ts of growth were not fully appreciated, but we also recognized that the causes of growth were not fully understood. Growth is often overlooked and underrated as an instrument for tackling the world’s most pressing prob- lems, such as poverty, illiteracy, income inequality, unemployment, and pollution. At the same time, our grasp of the sources of growth in develop- ing countries is less defi nitive than commonly thought—even though advice is sometimes given to policy makers in these countries with great confi - dence, perhaps greater than the state of our knowledge would justify. Con- sequently, the Commission’s mandate is to “take stock of the state of theoretical and empirical knowledge on economic growth with a view to drawing implications for policy for the current and next generation of policy makers.” The 21 commissioners included 19 experienced leaders from govern- ment and business, mostly from the developing world, and two Nobel Prize–winning economists. To help assess the state of knowledge, the Commission invited leading academics and policy makers from around the world to a series of 12 workshops, held in 2006, 2007, and 2008 in Washington, D.C., New York, and New Haven. A series of thematic papers, as well as 25 country case studies exploring the dynamics of growth in specifi c countries, was commissioned. The Commission also met several times in Washington, Singapore, New York, and Suzhou. The workshop papers reviewed issues such as monetary and fi scal policy, cli- mate change, inequality, growth, urbanization, education, and health— the subject of this volume. Each presentation benefi ted from comments by Preface ix members of the Commission and other workshop participants from the worlds of policy, theory, and practice.
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