Malaria and Economic Development

• Author: Saurabh C. Datta,Jeffrey J. Reimer
• Date: 01 February 2013
• DOI: http://doi.org/10.1111/rode.12011
• Published date: 01 February 2013

Malaria and Economic Development

Saurabh C. Datta and Jeffrey J. Reimer*

Abstract

Malaria tends to have a negative correlation with national income per capita. Many existing studies empha-

size how falling rates of malaria can enhance economic development due to the beneficial effect on human

capital. This paper emphasizes that causality may also run in the opposite direction, in particular, that

higher incomes—arising for reasons having nothing to do with human capital—may allow for increased

prevention and treatment of malaria, and therefore contribute to the negative correlation. We analyze the

malaria-income relationship for 100 endemic countries over a 17-year period using a simultaneous equa-

tions model that accounts for reverse causality and incidental associations. For most countries, income

growth has been the most important driver of the negative correlation between malaria and income.

Although reducing malaria may be its own reward, it takes much more than reductions in malaria to foster

development. Thisholds widely for different samples of countries.

1. Introduction

Malaria is the world’s most important parasitic infectious disease, and is a major cause

of mortality and morbidity in many developing countries (Conly, 1972; McCarthy et

al., 2000; Sachs, 2002). It causes over one million deaths per year inAfrica alone. When

malaria does not claim peoples lives, it has a detrimental effect on worker productiv-

ity, educational attainment, population growth and savings and investment (Sachs and

Malaney, 2002; Barreca, 2010; Bleakley, 2010a; Percoco, 2011). Due to reasons such as

these, a number of empirical studies have shown that malaria has a negative, statisti-

cally significant effect on national income per capita (e.g. McCarthy et al., 2000;

Gallup and Sachs, 2001).1

A point little considered in the empirical literature, however, is that there is inher-

ent endogeneity in the relationship between malaria and economic wellbeing. Since

lack of income adversely affects the ability to prevent and treat a disease, the relation-

ship between a disease and economic development probably has causality operating

in both directions (Pritchett and Summers, 1996; Strauss and Thomas, 2008). In the

words of Bleakley (2010b) “poor countries tend to be unhealthy, and unhealthy coun-

tries tend to be poor”. In our case, not only is there a malaria-to-income causal link,

there is also an income-to-malaria causal link (reverse causation). Thus if someone

were to regress malaria on per capita income, we might find a negative, statistically

significant effect as well, and conclude that causality runs in the opposite direction.

Pritchett and Summers (1996), for example, have found such a relationship for health

when it is characterized in terms of infant and child mortality.

* Datta: Internal Revenue Service, Washington, DC. Tel: 202-407-8317; Fax: 509-984-8943; E-mail:

saurabh.charles.datta@gmail.com. Reimer (corresponding author): Department of Agricultural and

Resource Economics, Oregon State University, 213 Ballard Hall, Corvallis, OR, 97331. Tel: 541-737-1415;

E-mail: jeff.reimer@oregonstate.edu.The authors wish to thank Monica Fisher, Jeff Nugent,Steve Buccola

and Bruce Weber for comments. Financial support came from the OregonAgricultural Experiment Station

and United States National Institute of Food and Agriculture.

Review of Development Economics, 17(1), 1–15, 2013

DOI:10.1111/rode.12011

© 2013 Blackwell Publishing Ltd