Connection between Economic Growth and Human Development - Brazil, Kenya and Cote d'Ivoire - Case Study Example

Connection between economic growth and human development Institution Name Introduction Human development refers to processes that facilitate or broaden people’s choices hence allowing them to leave longer and stay healthy. Conversely, economic growth provides resources to allow for persistent advancements in human development (Ranis & Stewart, 2005; Mukherjee & Chakraborty, 2010). Essentially, human development is getting increasingly observed as a critical objective of national development as opposed to economic growth. Still, the connection between economic growth and human development remains critically important since economic growth is a primary contributor to sustained advancement in human development (Ng’habi, 2012). Apart from the improvement in human development being the principal development goal, human development is also a significant contributor to economic growth over time (Bagolini & Comim, 2004). Basing on this background, this paper examines a two-way connection between human development and economic growth. Focus is places on three human development areas education, food and health in three countries: Kenya, Brazil and Côte d'Ivoire. An underlying assumption is that that there is a strong link between economic growth and human development since human development leads to economic growth and the other way around. Analysis: Connection between economic growth and human development While economic growth provides the needed resources that allow for continued advancement in human development, human development advancements raise the capabilities of economic agents that actively contribute to the economic growth. The two-way connection can be examined analytically using empirical investigation of the links and chains (Ranis & Stewart, 2005). Focus is therefore placed on two causal chains: one leads from economic growth to human development (Chain A) while the second one leads from human development to economic growth (Chain B). Chain A: Education, Food and Health in Kenya, Brazil and Côte d'Ivoire The first causal chain (Chain A) leads from economic growth to human development. In developing countries such as Kenya, Brazil and Côte d'Ivoire, evidences have showed that growth national product (GNP) leads to human development in the areas of education, food and health due to variations in government, non-governmental organisations, and household activities. For instance, Kenya’s Human Development Index (HDI) has risen marginally in the over the last one decade, reflecting improved better healthcare, good nutrition and better education (Higher education enrolment and attainment), which are signalled by high economic growth in terms of GDP. The country’s HDI rose to 0.535 in 2013 from 0.528 in 2006. Brazil’s HDI rose from 0.549 in 1980 to 0.718 in 2010 due to better health, better education and better nutrition, signalling high economic growth of more than 8.5 percent (Global Sherpa, 2014). Cote d’Ivoire has a low HDI of 2013 is 0.452, as of 2013, reflecting poor economic growth of 1 percent per annum. The country’s HDI value increased to 0.452 in 2013 from 0.377 in 1980, showing 19.9 percent increase. The country has low life expectancy at birth (50.7 years) and low school enrolment and attainment (mean school years 4.3 years) (UNDP, 2014). A similar degree of GNP also contributes to incongruent performance on human development, based on the distribution of GNP between these organisations and changes in their functions and performance (Ranis & Stewart, 2005). This may be reflected in the tendency of households in Kenya to use their tax income to purchase items that contributes directly to human development such as education, food and health. However, this would depend on factors including the degree of income distribution across many households (Hanushek, 2012). Critically, the low income households spend greater proportion of their income on human development items compared to individuals with higher incomes in these countries. Essentially, when the degree of poverty is high due to the fact that low national income per head or since it is poorly distributed, then the expenditure of most households on human development would be low. Greater differences in the levels of poverty emanate from the differences across the three countries in the degree and distribution of GNP. Despite the fact that poverty becomes lessened with economic growth, the degree of such reduction differs greatly because of the income distribution and variations over time (Ramirez et al., 1997). The manner in which economic growth transforms into reduction in poverty and income distribution is contingent on the nature of the growth process (Boozer et al., 2003). Additionally, the degree to which it is based on the creation of employment and increased rural incomes also reflects advancement in human development (Avgerou, 2003). In Brazil, the positive effects of family income correspond to the change in child schooling. In regards to the relationship, studies have established that when the income distribution in Brazil is as equal as that of Kenya, then the school enrolment among the children from low-income families would be higher (Sandavol, 2012). At the same time, while evidence on the link between health and income is narrow, studies in Brazil and Côte d'Ivoire indicate that household income has a substantial impact on the demand for health. Additionally, in cases where women tend to control income, the expenditure patterns are bent towards human development inputs, such as education and food. For instance, among Kenyan households, the greater the percentage of food under the control of women the greater the calories households consume (Ranis & Stewart, 2002). These show that there is indeed a link between human development and economic growth. Chain B: Education, food and health in Kenya, Brazil and Côte d'Ivoire The second causal chain (Chain B) leads from human development to economic growth. In this chain, empirical evidence suggests that the more individuals become healthier and more educated, the more they contribute to economic growth. Essentially, greater levels of human development impact economic growth by improving people’s capacities, competences and subsequently their productivity and creativity (Gopalakrishna & Jayaprakash, 2012). To this end, education and quality human health signify significant determinants of the makeup and growth of outputs. They also make up a significant ingredient in a system’s capability to borrow foreign technology efficiently. For instance, good nutrition when combined with primary and secondary education and health improve the productivity of workers. Studies have indicated that increased earnings are linked to extra years of schooling, while the rate of returns varies with the education level (Sinding, 2009). For instance, studies in urban Kenya that sought to differentiate between extra incomes due to the higher level of schooling indicated that additional education was linked to higher proportion in extra earning (Ramirez et al., 1997). In the agricultural sector, evidence also shows the positive impacts of education on farmers’ productivity, especially those using technology. In Kenya, studies have showed that farmers with more years of learning are more likely to use modern inputs and technologies leading to greater productivity (Ranis & Stewart, 2005). Additionally, improved nutrition and health positively impacts labour productivity, particularly among the people with low incomes. Studies have indicated labour productivity gains in Kenyan construction workers, where improvements in productivity resulted from better nutrition. In Brazil, the effects are medium run (Mayer-Foulkes, 2003). As indicated in the above discussions, there is indeed a link between human development and economic growth in both chain A and chain B. Empirical studies evidencing the connection Empirical evidence based on analysis of economic growth and human development situations in Brazil, Kenya and Côte d'Ivoire show a link between economic growth and human development. In regards to health, Ranis and Stewart (2005) selected infant mortality shortfall reduction (IMSR) to measure human development progress between 1960 and 2001. The decision to use infant mortality rate was based on the assumption that it is accurate in determining the variations over time. Additionally, it correlated with indicators like life expectancy and adult literacy (Boozer et al., 2003). The study established that GDP per capita growth was important in most runs. Other important variables included education and public expenditure as a proportion of GDP. For each percentage reduction in the rate of poverty, the infant mortality rate reduced by 3.8 percent. At the same time, human development advancement was also positively correlated to female enrolment, indicating higher female literacy. This shows that there is indeed a link between human development and economic growth. In the case of Chain B, GDP per capital was selected for measuring economic growth between 1960 and 2001. Findings suggested that GDP per capita is substantially related to human development, at between 1 and 5 percent in nearly all cases. Literacy rate reduced between 1970 and 1980 as the indicators of human development. This also shows that there is indeed a link between human development and economic growth. Conclusion Based on the above assessment of human development and economic situations in Brazil, Kenya and Côte d'Ivoire, it is perceivable that there is indeed a link between human development and economic growth. An economy may develop due to the high levels of human development that lead to high economic growth. On the other hand, the high ED also promotes advancements in human development. The connection is also viewed from the basis that weak human development may lead to slow economic growth, which in turn leads to poor human development advancements. Annotated Bibliography Mayer-Foulkes, D. (2003). Human Development Traps and Economic Growth. In: Health and Economic Growth: Findings and Policy Implications, [ed. Guillem López-Casasnovas, Berta Rivera and Luis Currais]. Mexico: Lomas de Santa Fé Summary: The paper concludes that human capabilities play an integral role in the shift to modern economic growth from stagnancy. The researchers survey macroeconomic and historical studies to indicate the significant effects for health and nutrition on the income level of developing countries. The researchers used cross-section analysis of the joint dynamics of income levels and life expectancy to provide evidence that stratified emergence from stagnancy is sustained to this day characterised by barriers to productivity and fundamental human development. It was established that these dynamics, human development traps have the potential to slow economic growth. Mukherjee, S. & Chakraborty, D. (2010). Is There Any Relationship Between Environmental Quality Index, Human Development Index And Economic Growth? Human Development Index and Economic Growth? Evidences from Indian States Evidences From Indian States From Indian States. MPRA Paper No. 17207 Summary: The paper shows that economic growth does not automatically lead to environmental sustainability of the country. Additionally, the researchers indicate that the connection between human development and economic growth is relatively complicated in analysis of countries such as India. The study aimed to analyze the connection among human development, economic growth and environmental quality. The researcher categorised the sample period into different period. The researchers used Environmental Quality Index (EQI), which put the selected variables under eight broad categories. The method was complemented by document analysis. The two methods showed that improved governance plays a critical role in ensuring sustainable human development. Ranis, G. & Stewart, F. (2002). Economic growth and human development in Latin America. Cepal review, 78(1), 7-23 Summary: The paper examines the two-way links between economic growth and human development in Latin America. The paper concluded that economic growth has the potential to improve human development once the amount of resources is expanded. At the same time, higher human development creates higher economic growth. This is since the more educated and healthy citizens continue improving the economic performance. The researchers used regression analysis to establish a strong link from economic growth and human development, even as economic growth of human development less strong compared to that, which is indicated by evidence drawn globally because of the effects of the debt crisis. References Avgerou, C. (2003). The link between ICT and economic growth in the discourse of development. In Korpela, M.; Montealegre, R. and Poulymenakou, A. (eds) (2003) Organizational information systems in the context of globalization. New York: Springer, pp. 373-386. Bagolini, I. & Comim, F. (2004). Does Growth improve Capabilities? - Evidence from Brazil. Retrieved: Boozer, M., Ranis, G., Stewart, F. & Suri, T. (2003). Paths to Success: The Relationship Between Human Development And Economic Growth. Yale University Center Discussion Paper No. 874 Global Sherpa. (2014). Brazil – Country Profile, News and Original Articles. Retrieved: Gopalakrishna, B. & Jayaprakash, R. (2012). Economic Growth & Human Development: The Experience of Indian States. Indian Journal of Industrial Relations 47(4), Hanushek, E. (2012). Economic Growth in Developing Countries: The Role of Human Capital. Retrieved: Mayer-Foulkes, D. (2003). Human Development Traps and Economic Growth. In: Health and Economic Growth: Findings and Policy Implications, [ed. Guillem López-Casasnovas, Berta Rivera and Luis Currais]. Mexico: Lomas de Santa Fé Mukherjee, S. & Chakraborty, D. (2010). Is There Any Relationship Between Environmental Quality Index, Human Development Index And Economic Growth? Human Development Index and Economic Growth? Evidences from Indian States Evidences From Indian States From Indian States. MPRA Paper No. 17207 Ng’habi, B. (2012). Economic Growth and Human Developmen; A Link Mechanism: An Empirical Approach. Retrieved: Ramirez, A., Ranis, G. & Stewart, F. (1997). Economic Growth and Human Development. Yale University Center Discussion Paper No. 787 Ranis, G. & Stewart, F. (2002). Economic growth and human development in Latin America. Cepal review, 78(1), 7-23 Ranis, G. & Stewart, F. (2005). Dynamic Links between the Economy and Human Development. DESA Working Paper No. 8 Sandavol, L. (2012). The Effect of Education on Brazil’s Economic Development. Global Majority E-Journal 3(1), 4-19 Sinding, S. (2009). Population, poverty and economic development. The Royal Society 364(1532) UNDP. (2006). Kenya National Human Development Report 2006. Retrieved: UNDP. (2014). Sustaining Human Progress: Reducing Vulnerabilities and Building Resilience. Human Development Report 2014 Retrieved: Read More