In this chapter, we examine the roles of education and health in economic
development. These two human capital issues are treated together because of
their close relationship. Our look at the connections between health and education
include similar analytical treatment, because both are forms of human
capital; the dual impacts of effects of health spending on the effectiveness of
the educational system and vice versa; and the fundamental fact that when we
speak of investing in a person’s health and investing in a person’s education,
we are after all talking about the same person. We then consider the relationships
between income on the one hand and health and education on the other.
Despite their close relationship, you will see that higher household income is
no guarantee of improved health and education: Human capital must be given
direct attention in its own right, even in economies that are growing rapidly.
Health and education may be distributed very unequally, just as income and
wealth are. But improved health and education help families escape some of
the vicious circles of poverty in which they are trapped. Finally, we take a
close look at educational and health systems in developing countries, to identify
the sources of the severe inequalities and inefficiencies that continue to
plague them. The evidence reveals that investments in human capital have to
be undertaken with both equity and efficiency for them to have their potential
positive effects on incomes.