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Healthcare and Economic Growth

It is no secret that health is instrumental to an individual’s education, income and overall development.

Par Karan Singh and Parijat Ghosh

First published on avril 04, 2016
min


This article originally appeared on Livemint. It is no secret that health is instrumental to an individual’s education, income and overall development. Studies show this is true for countries as well; health can be a causative factor for the aggregate economic growth of a country. The World Health Organization has estimated that a 10-year increase in average life expectancy at birth is associated with a rise in economic growth of some 0.3-0.4% a year. This evidence is available at the micro-disease level as well: for example, a 10% decrease in malaria is associated with an increased annual economic growth of 0.3%. A case in point are Asian countries such as China, Malaysia, South Korea and Thailand. Plotting their economic growth vis-à-vis two key health indicators reveals an astounding fact: They have succeeded in improving health as well as delivering sustained economic growth. Data over decades reveals that health improvements, illustrated through the infant mortality rate and life expectancy, actually preceded their economic surge. This is illustrated most dramatically in China, where both infant mortality and life expectancy improved dramatically in the 1960s, before the surge in Chinese economic performance. In other words, countries become healthy before they become wealthy. Read the full article in Livemint. Karan Singh is the managing director of Bain and Co., India, and leads the firm’s Asia-Pacific healthcare practice from New Delhi. Parijat Ghosh, based in Mumbai, is a partner and leads Bain’s healthcare practice in India.

This article originally appeared on Livemint.

It is no secret that health is instrumental to an individual’s education, income and overall development. Studies show this is true for countries as well; health can be a causative factor for the aggregate economic growth of a country.

The World Health Organization has estimated that a 10-year increase in average life expectancy at birth is associated with a rise in economic growth of some 0.3-0.4% a year. This evidence is available at the micro-disease level as well: for example, a 10% decrease in malaria is associated with an increased annual economic growth of 0.3%.

A case in point are Asian countries such as China, Malaysia, South Korea and Thailand. Plotting their economic growth vis-à-vis two key health indicators reveals an astounding fact: They have succeeded in improving health as well as delivering sustained economic growth.

Data over decades reveals that health improvements, illustrated through the infant mortality rate and life expectancy, actually preceded their economic surge. This is illustrated most dramatically in China, where both infant mortality and life expectancy improved dramatically in the 1960s, before the surge in Chinese economic performance. In other words, countries become healthy before they become wealthy.

Read the full article in Livemint.

Karan Singh is the managing director of Bain and Co., India, and leads the firm’s Asia-Pacific healthcare practice from New Delhi. Parijat Ghosh, based in Mumbai, is a partner and leads Bain’s healthcare practice in India.