The Impact of Poor Health on Total Factor Productivity

A number of recent studies have illustrated the link between health and growth (Gallup and Sachs 2000, McCarthy et al. 2000, Bhargava et al. 2000). This paper argues that a key mechanism through which health affects growth is via total factor productivity (TFP). We first estimate TFP based on a production function and then estimate the determinants of TFP, paying particular attention to three indicators of health that are particularly problematic in developing regions: malnutrition, malaria and waterborne diseases. We find the impact of poor health on TFP to be negative, significant, and robust across a wide variety of specifications.