Sub-optimal Investments in Public Health: A Case for Persisting Poverty

Abstract

Investment in Human capital is one of the most important variables that determine long run economic growth of an economy, even more so for low income, capital deficient, labour abundant economies. In the context of additions to value added, endowments of education and health of workers take prominence. This paper theoretically and empirically shows that suboptimal investments in health care lead to slowing down of economic growth in the long run and causes poverty and inequality to persist. This persistence of poverty can be despite rapid rates of economic growth in the short run. The paper uses endogenous growth models to argue that investments in health are necessary for long run, sustainable economic growth. It also uses secondary data to draw an overview of the public health scenario in India, bringing to fore the inadequacies of the structure and the need for a greater and more dedicated intervention by the state.