(University of Oregon, Dept of Economics, 2010-09) Chakraborty, Shankha; Papageorgiou, Chris
Why are some countries mired in poverty and ill health? Can policy facilitate their transition
to sustained growth and better living standards? We offer answers using a dynamic
model of disease and development. Endogenous transmission of infectious disease generates
non-ergodic growth where income alone cannot push a country out of a low-growth
development trap. Policy interventions, for example external aid, can successfully accelerate
growth only when directed towards improving health and eliminating the burden of
infectious disease. Prioritizing improvements to adult mortality over morbidity is better for
development.
