Policies to stimulate growth: should we invest in health or education?

Abstract

Empirical studies in the literature on economic growth have focused on the affect of education and yet Knowles and Owen (1995, 1997) found health, proxied by life expectancy, to be highly statistically significant with education having a modest role. This study extends their model and employs variables that are more conducive to policy formulation: calorific intake and school enrolment ratios. Results suggest that reducing undernutrition would only make a modest contribution to economic growth while increasing enrolment ratios, especially secondary, has a positive and more significant effect. Policies to increase economic growth should favour investments in education over health.