- Malaria is the world’s most important parasitic infectious disease, and is a major cause of mortality and morbidity in many developing countries. In this dissertation I study the interaction of malaria and economic development at both the macro- and micro-economic levels.
In the first essay I examine the economic impact of malaria on income per capita using cross-country time-series data for 100 malaria prone countries between the years 1985 and 2001. I try to explain the so-called “malaria gap,” which refers a general difference (gap) in parameter estimates found between macro- and micro-economic studies of the impact of malaria on economic well-being. By using more detailed data and controlling for a larger number of economic determinants of malaria than previous macro-economic studies, I am able to resolve most of the “malaria gap” associated with earlier studies in the literature. I show that the impact of malaria on economic well-being is statistically significant but fairly small, which coincides with the findings of certain recent micro-level studies. Policy implications of these empirical findings are discussed.
In the second essay I turn my focus to the fact that malaria itself is an endogenous variable over which households and government have some control. I start with simple plots of data that show that malaria has a negative correlation with
national income per capita, whether looking across countries at a point in time, or looking at a single country over time. Some countries have moved steadily over time from an equilibrium characterized by low income and high malaria, to a new equilibrium with a relatively high income and low rate of malaria. I develop and estimate a simultaneous equations model to explain these relationships. I distinguish three potential causal chains: the ability for decreases in malaria to increase income, the ability for increases in income to reduce malaria (reverse causality), and external factors that may lead to both higher income and lower malaria (incidental association). I find that changes in income have a much stronger effect on malaria incidence than the other way around. While a 1% rise in the number of malaria cases per million decreases income per capita by less than 0.01%, a 1% rise in income per capita decreases the number of malaria cases per million by more than 1.1%. If income were just 1% higher, 603,189 cases of malaria could be averted annually in the 100 countries of the sample.
In the third essay I take a completely different approach in that I use micro-economic household survey data to examine how farming households in poor, malaria-prone areas respond to an outbreak of malaria. I focus on their choice of cropping pattern, since they may shift away from labor-intensive, high-risk yet high-return crops towards those with lower risk and effort yet much lower returns. Households may also move away from formal jobs with long time commitments towards daily labor type activities in which they only work when healthy. These hypotheses are tested using detailed data for 919 households of the Kagera region in Tanzania over the 1991-94 period. To specify an appropriate econometric model, I first develop a theoretical model that captures the micro-economic processes that I highlight above. The econometric results are generally consistent with the ideas in the theoretical model. Outbreaks of malaria and other natural disasters, such as pest attacks and drought, prompt households to move away from chemical-input- and labor-intensive crops (e.g., sugarcane, tobacco, cotton) towards subsistence (e.g., cassava and sweet potato) and tree crops (e.g., coffee and
banana). At the same time, they are found to be depending more on casual labor employment and remittance income, while cutting down expenditures on purchased agricultural inputs and net asset creation.