Kerala 2005 - of Planning Commission

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Fogel’s Nobel Prize winning work first brought out the extent of long-term
changes in nutrition and health, and their importance for long-term economic
growth. A number of studies provide further historical evidence of the
importance of health for economic growth. 2 Contemporary macroeconomic
studies find that health indicators have substantial effects on levels of income
and, for poorer countries, on their rates of growth. These cross-country studies
lend support for a significant impact of life expectancy on economic growth.
A study on the productivity gains associated with stature rises in Korea and
Norway found high contribution of health to economic growth. 3 A direct effect
of the improvements of health and nutrition on labour productivity has been
associated with calorie increases in the case of developing economies.
Recent theoretical literature on growth reverts to the same themes slightly
differently. In their aim to endogenise technical progress, they emphasise
education and research and development. In one version, the emphasis is on
higher level of education of the workforce, as it enhances the productivity
of capital and raises the productivity of the entire workforce via innovations.
As externalities are generated with higher levels of education, the extent of
'spillovers' too becomes substantial. In another version, the route to higher
growth is via investing in research and development. This has a dual effect
not only on the firm’s profitability but also on the productivity of other firms
consuming its output, not to say of the effects of interactive learning. The
crucial input here again is education.
In the present context, with higher levels of integration of hitherto closed
economies into the world market, the nature and type of interactions with
external economies depend on the level of human development in the domestic
economy. The nature of factor endowments and thus the composition of
trade are influenced by the level of education and skills of a country’s labour
force. This, in turn, determines the outcomes of the process of globalisation,
in terms of higher export earnings, favourable terms of trade and thus the
macro performance. Thus, translating openness into higher levels of growth
2 For example, see Arora (2001).
3 Weil (2001).