Health and Economic Development: Evidence from non-OECD Countries

This paper studies the empirical relationship between a country's health and its GDP dynamics in low- and middle-income countries. We employ a semi-parametric technique, which combines mixed panel data models and cluster analysis to account for unobserved heterogeneity, which is an important source of estimation bias in growth regressions. We estimate a version of Mankiw, Romer and Weil (1992) augmented with human capital, in the form of both education and health. Our estimates show that population's health, here proxied by life expectancy at birth, has a positive, sizable, and statistically signicant effect on both the level and the growth rate of the real per capita GDP.