Health and Growth

Abstract

The health status of the population can make a difference to the growth prospects of a nation. This can be seen from a number of dimensions. First, a healthy workforce ensures less absenteeism and thus higher productivity. Second, as life expectancy increases there are increased incentives to invest in human and physical capital. Third, better health status has the potential to augment the savings rates in the economy as workers have an inventive to save for retirement. Fourth, better health status improves labour force participation rate (serious illness forces people to drop out of the labour market). Health is also important from the perspective of ‘demographic transformation’. As health awareness improves, the infant mortality rate (IMR) drops, motivating people to have smaller families. Seen from another angle, to the extent health expenditure can be treated as an investment in human capital, it has the scope to act as an engine of growth (Lucas, 1988).