The Primacy of Institutions Reconsidered: Direct Income Effects of Malaria Prevalence (original) (raw)
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The Role of Historical Malaria in Institutions and Contemporary Economic Development
2021
This research examines the causal impact of institutional quality on economic development from a novel perspective. At the country level, we exploit variation in the malaria prevalence in 1900, just before vector-control methods were developed, to instrument for institutional quality using a two-stage least squares instrumental variables framework. Our instrument is a population-weighted average of malaria endemicity estimates for the year 1900 developed by the WHO in the 1960s. We argue that this measure of historical malaria offers more expansive geographic information about the disease environment than other metrics, and our baseline IV estimates reveal that greater institutional quality causes greater contemporaneous economic growth. Next, we investigate the robustness of these baseline results to alternative explanations, including the role of geography and early colonizers’ experiences, as the causal link between the early disease environmental, institutional quality and conte...
Institutions Don't Rule: Direct Effects of Geography on Per Capita Income
2003
In a series of papers, my colleagues and I have demonstrated that levels of per capita income, economic growth, and other economic and demographic dimensions are strongly correlated with geographical and ecological variables such as climate zone, disease ecology, and distance from the coast. Three recent papers purport to show that the role of geography in explaining crosscountry patterns of income per capita operates predominantly or exclusively through the choice of institutions, with little direct effect of geography on income after controlling for the quality institutions. This note shows that malaria transmission, which is strongly affected by ecological conditions, directly affects the level of per capita income after controlling for the quality of institutions.
Disease, Institutions and Underdevelopment
SSRN Electronic Journal, 2000
What explains poverty of Sub Saharan Africa and South Asia? One view holds the disease environment of these regions as the primary culprit. Others see it as a typical symptom of growth retarding institutions. We test validity of these competing assertions for a cross section of countries. Our results indicate that institutions are the prime determinant of economic performance of countries. Disease does not play a significant role in determining outcomes. On the contrary, we find support for the indirect effect of disease via institutions, as asserted by the 'institutions school'. Interestingly, the 'institutions school' contention about geography having no direct effect on income is also not validated. Our results show that being land locked can pose significant disadvantage for a country. Endowment of hydrocarbon, however, is beneficial for economic outcomes.
2022
Malaria has multiple long-term effects on economic growth and development, which are difficult to measure from a macroeconomic perspective. In Africa, there is strong evidence that poverty and malaria are related to each other by influence; the conditions of one often influences the other. Countries inside of Africa have deficits in economic growth, since the beginning of history and will most likely remain that way until there is a reduction in avoidable diseases, or more so, when there is an increased interest in investing towards effective healthcare. There is strong evidence that nations with less disease do better in terms of economic growth-i.e., higher incomes, better efficiency, and lower unemployment rates, and that economies with heavier prevalence of disease remain in a cyclical battle without exogenous support.
2010
This paper examines the role of long standing institutions -identified through geography, disease ecology, colonial legacy, and some direct measures of political and economic governance -on human development and its non income components across countries. The study employs a novel econometric technique called the Bayesian Model Averaging that allows us to select the relevant predictors by experimenting with a host of competing sets of variables. It constructs estimates as weighted average of OLS estimates for every possible combination of included variables. This is particularly useful in situations when there is model uncertainty and theory provides only a weak guidance on the selection of appropriate predictors. Of the 25 variables that we tried, three stand out in terms of their degree of importance and their robustness across various specifications. These include malaria ecology, KKZ index of good governance and fertility rate. Our finding on the dominant and robust role of malaria ecology in explaining differences in human development across countries, even in the presence of variables that directly and indirectly measure the quality of institutions, is extremely fascinating. It shows that malaria ecology has a direct negative impact on human development and this effect appears to be over and above its effect via institutions. Some of the other measures of climate and geography as well as those of colonial legacy are important as long as we do not control for some direct measures of the performance of political and economic institutions such as the KKZ index of good governance and democracy score. Once we control for these and other conditioning variables such as public spending on health and education; fertility rates; and measures of health infrastructure, the importance of geography and colonial legacy disappears. JEL Classifications: I10; I12; I18; I28
The Economic Burden of Malaria
2000
Malaria and poverty are intimately connected. Controlling for factors such as tropical location, colonial history, and geographical isolation, countries with intensive malaria had income levels in 1995 only 33% of countries without malaria, whether or not the countries were in Africa.
Institutions, Geography and Trade: A Panel Data Study
Departmental Working Papers, 2007
A number of recent papers study the impact of institutions, trade and geography known as "deep determinants" of economic development using cross-section data. This paper instead employs a panel data approach to examine the impact of these three determinants on per capita income. Our approach enables us to account for unobserved heterogeneity across countries, an issue that cannot be addressed in a crosssection framework. Moreover, employing the Hausman and Taylor (1981) approach allows us to obtain direct parameter estimates of the time invariant explanatory variables like geography or some institutional measures, making our results comparable to the existing cross-section literature. Also, by using lagged explanatory variables whenever possible we can account for contemporaneous correlation between these variables and the idiosyncratic error term. We find that the quality of institutions and openness to trade both have positive and statistically significant coefficient estimates throughout most specifications, while geography, captured by malaria ecology measure, has negative estimates that are often, but not always statistically significant. In terms of their economic impact, institutional measures appear to have the strongest impact, followed by openness to trade measures. In comparison, geography measures have rather small elasticity estimates. JEL: O1, N1, H1, F1
Socioeconomic and Geographic Variations that Impacts the Spread of Malaria
2020
Malaria is a preventable disease that brings death to millions of people around the world. Among the victims of malaria epidemic, children under age of five are the most vulnerable. Malaria can influence where people live, work and also the family fertility decisions. In addition to the direct economic impact, Malaria can cause indirect socioeconomic impacts as it affects schooling, tourism, and sporting events. This epidemic has heavily impacted the developing countries, specially the ones that are in Sub-Sahara region of Africa. During our study, we explored the data on six indicators used by United Nations and World Heath Organization to evaluate the impact of Malaria and the Gross Domestic Product (GDP) data from chosen 34 countries. We conducted a cluster analysis on countries based on the number of confirmed deaths due to Malaria and the GDP using multiple clustering algorithms. We observe a negative relation with GDP and number of Malaria deaths.
The Economic Burden of Malaria: Revisiting the Evidence
The American Journal of Tropical Medicine and Hygiene, 2019
A portion of the economics literature has long debated about the relative importance of historical, institutional, geographical, and health determinants of economic growth. In 2001, Gallup and Sachs quantified the association between malaria and the level and growth of per capita income over the period 1965-1995 in a crosscountry regression framework. We took a contemporary look at Gallup and Sachs' seminal work in the context of significant progress in malaria control achieved globally since 2000. Focusing on the period 2000-2017, we used the latest data available on malaria case incidence and other determinants of economic growth, as well as macro-econometric methods that are now the professional norm. In our preferred specification using a fixed-effects model, a 10% decrease in malaria incidence was associated with an increase in income per capita of nearly 0.3% on average and a 0.11 percentage point faster per capita growth per annum. Greater average income gains were expected among higher burden countries and those with lower income. Growth of industries with the same level of labor intensity was found to be significantly slower in countries with higher malaria incidence. To analyze the causal impact of malaria on economic outcomes, we used malaria treatment failure and pyrethroid-only insecticide resistance as exogeneous instruments in two-stage least squares estimations. Despite several methodological challenges, as expected in these types of analyses, our findings confirm the intrinsic link between malaria and economic growth and underscore the importance of malaria control in the agenda for sustainable development.
Evidence on economic versus political institutions as determinants of development
2017
A growing body of evidence suggests that institutions are an important causal determinant of economic development, yet there remains considerable debate over which institutions are most important. In this paper, we employ an identification strategy that allows us to simultaneously examine the potential causal impact of economic and political institutions. The results of different instrumental variable estimators strongly suggest that economic institutions, gauged by the Index of Social Infrastructure and by the Economic Freedom of the World Index, are economically and statistically significant determinants of income per capita. However, political institutions, measured by Constraints on the Executive, exert smaller and less discernible statistical impact on development. These findings are robust to the inclusion of confounding factors that potentially influence development such as geography, ethnolinguistic fractionalization, human capital, as well as robust to a number of alternati...