Does Better Nutrition Cause Economic Growth? The efficiency cost of hunger revisited

This paper considers the impact of the nutritional status on the growth rate of real GDP per capita. In particular, a panel of 114 countries’ Dietary Energy Supply (DES) per capita from 1961 to 1999 is combined with the latest release of real GDP per capita data from the World Bank (World Development Indicators, 2001). Besides pooled regressions, we also divided at the sample into a 10-year and 5-year interval in order to investigate the medium and short run effects. Moreover, we compared and contrasted across country groups within each of the above time frames to discern cross-sectional performance difference. We found that on average the long run real GDP per capita growth rate can be increased by 0.5 percentage point if DES is increased by 500 kcal/day. However, for a subgroup of developing countries (East and Southeast Asia) we found this number could be four times larger, while in most of the other developing countries this effect is either negative or negligible. The short run effect is more likely to be insignificant or negative than long run effect. We believe this could be due to the dynamic interaction between the short run population growth effect and the long run productivity effect. These results are robust to various econometric modeling procedures as well as to the identity critique. Since this nutrition trap is a short run effect, any policy shall aim to reduce hunger for the long run. This study shows that having chronic hunger in the country is costly in terms of economic growth in the long run.