The Connection Between Health and Economic Growth: Policy Implications Re-examined.

In order for governments to implement important policies for better health and enhanced economic growth, it is vital to first consider both the processes and connections that trigger the complicated relationship between health and income. For many years the causality running from income to health has been recognized as a principal and instinctual proposition. However, recent literature presents empirical evidence of a reversed causation - from health to income. This paper focuses on the reversed causation by analyzing three recent case studies that use panel data, providing a multi-dimensional perspective, and thus enabling the findings to form general solutions to policy problems that governments face worldwide. Bloom and Canning (2001) argue that both directions of causality can work together at the same time. This leads to a virtuous circle where health enhancements stimulate economic growth, which then stimulates health. Taking into account a scenario where both variables stimulate one another leads to significant policy implications. Drawing on evidence provided in this paper, policymakers should look at health expenses as an investment rather than a cost, taking a balanced approach, and implementing a long run viewpoint. Governments must take health seriously if they want sustain and improve on economic and social outcomes. [ABSTRACT FROM AUTHOR]