Degree

Master of Science in Economics

Faculty / School

School of Economics and Social Sciences (SESS)

Department

Department of Economics

Date of Submission

2023-10-20

Supervisor

Dr. Adnan Haider, Professor and Research Fellow - CBER, Department of Economics

Project Type

MSECO Research Project

Access Type

Restricted Access

Keywords

Economic Growth, Health, Human Capital, Dynamic Panel Analysis

JEL Code

I15, O47

Abstract

This research aims to build upon a central question in economic literature as to why some countries are richer than others, by incorporating an often-ignored variable of interest: human capital in the form of health. The Augmented Solow model is linearized to estimate an equation which provides insight on the impact of aggregate health on economic growth of a sample of 158 countries. This study recognizes the influence of varying development stages on the health-income relationship and therefore, considers it as an explanatory dummy variable in the analysis. The methodology is two-fold: first a dynamic panel model is estimated using two-step difference GMM (to establish association) for a panel of countries across the development range; secondly, it investigates the direction of causality between health and income for the same panel of countries using IVLS. The findings indicate infant mortality rate as a significant explanatory variable when determining growth, most impactful for the low-income countries whereby a fall in IMR of 1% increases the GDP per capita by 1.1% - this statistic decreases as one progresses up the income ladder. Moreover, significant evidence of reverse causality is found for the low-income group only, implying that significant improvements in public health outcomes will in turn lead to increases in GDP per capita for low-income countries but not for the richer countries. The latter conclusion has significant implications for a lower-middle income country like Pakistan, especially when improvements in public health are cited as leading towards economic prosperity by major multilateral organizations as the WHO.

Pages

ix, 55

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