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Microfinance and Digital money

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Intro to topic Social capital Microfinance Solving adverse selection Solving moral hazard Solving enforcement - Beasley-Coate Does Microfinance work? Joint liability Group lending Digital money M-Pesa









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Topic 5: Early interventions, Health and Education
12/11

Health: Introduction
Improving the health of societies can improve growth and development. Better health
means better economic wellbeing and vice versa. Countries with intensive malaria had
income levels in 1995 of only 33% that of countries without malaria, whether or not the
countries were in Africa.
Is there higher incidence of malaria in poorer countries? Malaria is geographically specific,
so incidence of malaria is exogenous. Cross-country regressions for the 1965–1990, taking
into account initial poverty, economic policy, tropical location, and life expectancy, among
other factors, countries with intensive malaria grew 1.3% less per person per year, and a
10% reduction in malaria was associated with 0.3% higher growth. Gallup and Sachs (2001)
So according to them reducing malaria will better the economy of a country.

But Acemoglu and Johnson (2007) find there is no evidence that the large increase in life
expectancy raised income per capita as they want to promote their idea that institutions are
the main cause of poverty in developing countries.
There is a strong correlation between measures of health and both the level of economic
development - but is this a causality?
Health variables may be capturing other disadvantages and negative effects. Life expectancy
at birth in India in 1999 was 60 compared to 40 in Britain in 1820, when income per capita
was approximately the same level as in India today.

To conclude it is really hard to say health doesn’t affect the development of a country
although you have to be specific in your findings.

Early-life Malaria Exposure and Adult Outcomes
Cutler, Fung, Kremer, Singhal and Vogl (2010)
This paper looks at effects of childhood exposure to malaria eradication on human capital
accumulation and economic status in adulthood.
Malaria can effect childhood development through three channels: 1. its effects on cognitive
ability, 2. school absenteeism and 3. foetal development.
Benefits from lower incidence malaria can either be through better physical and mental
condition later in life and improved earning ability due to better schooling.

The National malaria eradication program in India in the 1950s started as a quasi-
experiment. This study used the geographic variation in malaria prevalence. It compared
gains for cohorts born before and after the program in areas with varying pre-eradication
prevalence. In 1947, India suffered from 75 million cases of malaria per year. After the
malaria eradication program started in 1965, the malaria cases were 100000 per year.
The study looks at the effects on outcome (well-being later in life of the individual) of the
eradication of malaria program and the endemicity of malaria in the district each individual
was born in. The eradication program had the biggest marginal effect where the endemicity
of malaria was highest.
Endemic: A characteristic of a particular population, environment, or region.
Malaria is really endemic in tropical and humid areas, like forests.
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