Reassessing the effect of economic growth on wellbeing in less-developed countries, 1980-2003

Abstract

Development debates have been greatly influenced by the growth consensus: the conventional wisdom that economic growth should be the primary priority for less-developed countries (LDCs) because it most effectively improves the well-being of the world's poor. We compare the impact of growth to other independent variables in an unbalanced panel analysis of up to 109 LDCs and 580 observations across six time points (1980, 1985, 1990, 1995, 2000, and 2003). Our dependent variables include caloric consumption, infant survival probability, one-to-five year survival probability, female life expectancy, and male life expectancy. First, we find that gross domestic product (GDP) has significant positive effects on caloric consumption, female life expectancy, and male life expectancy. Second, GDP does not have robust effects on infant and one-to-five survival probabilities. Third, fertility, urbanization, and secondary school enrollment have larger effects than GDP in the majority of models. The more powerful effects of fertility, urbanization, and secondary schooling cannot simply be attributed to an indirect effect of GDP. Fourth, we find that dependency variables do not have robust significant effects. Fifth, over time, GDP has become much less effective at improving caloric consumption and infant and one-to-five survival. We infer that there are serious limitations to concentrating exclusively on economic growth to improve well-being in LDCs.