Contribution of health to economic growth economics essay

The linkage between wellness status and economic activity has been debated several times in the yesteryear, and this issue became even more of import in the last few old ages. This relationship is instead complex. It has been already recognized that increased national wealth is linked with betterment of wellness at single and social degree.

Furthermore, it is clear that improved wellness status has an consequence on economic activity and extent of economic growing. Several surveies in high- , middle- , and low-income states examined this linkage. These show that a important displacement in paradigm is discernible. Harmonizing to the new paradigm wellness was non considered as a pure byproduct of economic development, but as a cardinal factor and basic status for economic growing.

This manner puting in wellness became a nucleus portion in many states ‘ development schemes and policies. At European degree the purpose of a competitory and dynamic cognition based community was set, enabling sustainable economic growing, invention and a stronger social coherence.

The issue of part of human capital to economic growing was the footing for several treatments and analyses. Until now instruction was considered as the chief constituent of human capital. In the context of the neo-classical theory, economic growing is dependent on the undermentioned factors: stock of capital, stock of labour and productiveness.

Productivity was considered in the first clip as a factor affected by outside forces. Subsequently on this point of position changed by looking at the investing into human capital as a possible beginning for heightening productiveness and invention. A research of Becker ( 1964 ) was based on the human capital formation. Harmonizing to him an addition in human capital raises the person ‘s productiveness. It is reached through investing into instruction, developing and wellness.

The function of wellness as another of import constituent of human capital next to instruction was introduced by Grossman ( 1972 ) . Grossman constructed a theoretical account where the demand for wellness was applied in human capital theory. Grossman differentiated wellness as a ingestion good and as a capital good. In the instance of the ingestion good people practically enjoy their well-being and good wellness status.

When looking at wellness as a capital good it reduces the figure of yearss spent badly. This manner it enhances the figure of productive on the job yearss and yearss spent for leisure activities. In this context wellness is non merely consumed ( enjoyed by persons ) , but produced at the same clip as good. Persons can put into wellness to keep and better it over clip. The theoretical account of Grossman received critics as good, but remained a cardinal theoretical account of analyzing the demand for wellness.

Figure 1: Factors act uponing wellness and results

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Figure 1 represents factors finding the wellness position at single and at society degree, and different channels through which wellness contributes to economic activity. On the left side factors are presented impacting wellness of persons: genetic sciences ( inherited ) life style, instruction, wellness attention and other socioeconomic and environmental factors.

Many exogenic factors impacting the wellness position can be influenced by public policies. On the right side different ways are presented through which wellness exerts a direct consequence on economic results.

When analyzing the linkage between wellness and economic growing the feedback of income on wellness should be taken into consideration excessively. Marmot ( 2002 ) provinces there are two ways of through which income influences wellness status.

On one manus higher income can hold a direct affect on stuff conditions holding a positive impact on biological endurance. On the other manus higher income positively influences societal engagement. Therefore, persons have better conditions to pull off life fortunes and heighten the feeling of security.

Based on Figure 1 there are four chief channels or mechanisms where the consequence of wellness on the economic system is explained.

Labor productiveness

Peoples with a good wellness position can bring forth more within a defined clip interval. Higher productiveness is arising from better physical and mental wellness. Furthermore, persons with improved physical and mental position can utilize engineering more efficient and they are expected to be more flexible excessively.

Labor supply

The direct consequence of wellness on the labour supply is non obvious in some instances. Good wellness status reduces the figure of ill yearss spent, therefore increasing the figure of productive on the job yearss. In this sense it influences determinations on labour supply every bit good, because of its impact on rewards and expected life-time. In the instance when rewards are connected to productivity a healthier worker can bring forth more, therefore heightening rewards and this manner the labour supply. On the other manus a better wellness position enables higher lifetime net incomes increasing the hazard of earlier backdown from working. The decision can be drawn that these effects are based on single penchants. Based on this wellness can impact the economic system in a similar manner as wellness affect single penchants.

Education

Based on the theory of human capital more educated people can make higher criterions in footings of productiveness and net incomes. With a good wellness persons can accomplish higher educational making lending significantly to future productiveness.

Capital Formation

The cardinal point here is, whether the effects of wellness at the micro degree are successfully applicable at macro or state degree, in footings of GDP and growing rate. The mentioned theoretical theoretical accounts already assumed that there should be a positive relationship. Now analyzing several empirical surveies the necessary grounds can be collected to do more accurate judgement sing this relationship.

In first line, historical surveies contributed significantly to the research of this issue. Robert Fogel was considered as the innovator of the historical survey attack. These surveies examined the part of wellness to economic growing over a longer clip period ( 1-2 centuries ) . Fogel ( 1994 ) found that the development in wellness and nutriment resulted a 30 % addition in income and 1. 15 % per capita in the instance of the UK, within two centuries.

Researchers paid less attending to the part of wellness to economic growing in the instance of high-income states. Just a few surveies were made finding the impact of wellness on growing specifically. Some of them found even a negative relation between wellness and economic betterment, but this was chiefly due to the usage of imperfect wellness indexs and the institutional policy model for these states.

Despite the few negative consequences wellness still remained as a robust determiner for economic growing. The most normally used placeholders for wellness are life anticipation and grownup mortality. Knowles and Owen ( 1997 ) made a research on 22 high-income states utilizing life anticipation as a placeholder for wellness and found an undistinguished relationship between wellness and economic growing.

The consequences were adjusted by Tompa ( 2002 ) , where he stated that the undistinguished result of the survey was due to limited variableness of life anticipation within the chosen sample of states. More important consequences were achieved by Beraldo et Al. ( 2005 ) . He found that investings in wellness consequence a 16-27 % addition in growing rates.

The work by Suhrcke and Urban ( 2005 ) followed a somewhat different manner by utilizing other indexs. They used non-communicable diseases as a footing to analyze the impact of wellness on growing in high-income states in a better manner.

More specifically, cardiovascular disease ( CVD ) was used as a placeholder for wellness. 26 high income states were taken as a sample in the clip period of 40 old ages. Consequences showed that CVD is a robust index in the instance of high-income states. A decrease of 10 % in CVD resulted an addition in the growing rate of per capita GDP by 1 per centum point.

The consequences of empirical surveies show that merely appropriate factors enable the accurate scrutiny of the relationship between wellness and economic growing. The best indexs are life anticipation and mortality rate, but in add-on CVD is good every bit good, because it shows more variableness among high-income states than life anticipation does. Furthermore, mental illness and other morbidity indexs for rich states are suggested by Tompa ( 2002 ) .