THE ECONOMIC BURDEN OF MALARIA

THE ECONOMIC BURDEN OF MALARIA

J.L. Gallup & J.D. Sachs

Journal of Tropical Medicine and Hygiene, Vol. 64 (2001) pp. 85-96

A Summary

What effect does Malaria have on GDP growth in Malaria endemic regions? They estimate that countries with severe malaria incidence have on average 1.3% lower growth rates per year.

It is quite clear that poor countries predominate in the same regions as malaria, and that economic growth in those regions is much lower than elsewhere. What is not clear is whether the observed correlation between malaria and low growth are causal or merely coincidental. Specifically, malaria could merely be proxying for other determinants of low growth such as poor quality tropical soils, inaccessibility to world markets, different patterns of colonization etc. However, in regressions that include these types of geographic variables, malaria is still found to have a significant effect. This is also the case when Africa is excluded from the sample, which shows that it is not merely Africa that is driving the results.

What is not clear however is whether malaria is a cause of poor growth, or the product of poor growth? If for example, malaria eradication/prevention becomes possible only when countries reach a certain level of development, then the true effect runs from growth to malaria, not the other way around. The authors claim that this interpretation does not tally with the facts. They claim that Malaria eradication is determined by ecology and climate, and not by personal behviour, general development, or the extent of urbanization (although they may be important, they are of second order importance). This can be shown when it is considered that the regions with the worst malaria in 1965 had the least reduction in malaria in the next three decades. They claim that in endemic areas of Africa with up to 300 infectious bites per night, control simply is not possible and so it cannot be argued that control is the effect of growth.

Whilst seductive, this line of reasoning is not really sufficient to prove the case. As they attest to there have been successful eradications of malaria. For example in Greece where up to a quarter of the population was infected in the malaria season, it was successfully eradicated. This also occurred in Italy, and other parts of Southern Europe. Whilst the virulence and prevalence of the disease in those areas may indeed have been less severe than in Africa, it is not at all clear that they were not able to eradicate the burden due to comparatively higher levels of development.  The sort of largely anecdotal evidence presented in the paper is not really sufficient to substantiate the claim that causality runs from malaria to growth and not vice-versa.

Additionally, they show growth patterns for Taiwan that successfully eradicated malaria, and compare their pre and post malaria growth rates with that of the rest of East Asia, and the simple difference in difference is only +0.9% which is hardly compelling, and is not estimated using regression techniques so no statistical significance can be evaluated. Additionally Mauritius did not see growth after eradicating malaria, although this may have been due to the closed nature of their economy – this indicates either that the effect does not run from malaria to growth, or that malaria interacts with other features of the economy such that simple eradication does not guarantee a growth episode.

They run a cross country growth regression using a new malaria index which is the fraction of population living in areas with high malaria risk in 1965 times that fraction of malaria cases in 1990 that are due to the most severe malaria vector. On the right hand side are initial income levels, human capital, institutional variables, geographic and economic. The results indicate that both initial levels of the index and subsequent changes are significantly associated with GDP growth. One might argue that the malaria index is only capturing the worst type of malaria, and there seems to be little sense in leaving out other types, as restricting to the worst variety essentially confines analysis to Africa, and Haiti. Indeed when Africa is excluded the results persist, however this could be being driven exclusively by Haiti, which is extremely poor, and burdened with very high malaria levels. Nevertheless, the results show that for a 10% reduction in the malaria index on average would result in 0.3% growth increase.

In order to combat remaining problems of endogeneity they instrument for the malaria index using the prevalence of mosquito vectors in each country in 1952. No first stage is reported and thus it is not possible to evaluate the strength of the first stage. Additionally it is not clear that the instrument and the index are substantially different, they both seem basically to be measuring the same thing. However, the results do not substantially change the OLS estimates.

When they include other tropical diseases in the regressions they do not find any significant effects. Whilst this indicates that malaria is not proxying for other diseases, it is not theoretically clear why malaria should have significant effects, but yellow fever etc. should not. This leads me to question he results.

There is little agreement as to what channels malaria works through to lead to lower GDP. Suggested in the paper are:

  • Lower productivity due to morbidity (although potentially mitigated by partial immunity)
  • Lower levels of cognitive development (see for example the Spanish flu paper in EC454)
  • Malaria keeps away tourists and investors.
  • Malaria limits internal movement of people and hence goods/services.

If the results are taken at face value, then a huge amount of emphasis should be put on prevention and eradication. This is in fact what we see in the development community. LLINs are being widely distributed and provide a very cost effective way of reducing the incidence of malaria, particularly since only 50% of a community need to sleep under a net in order for spillovers to be created (the mosquito dies when it lands on the net so is unable to bite anyone else). Naturally these interventions are not made solely with GDP in mind as there are welfare benefits from not being sick that are potentially more of concern than long run GDP growth.

 

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