Interdependencies of Health, Education & Poverty with Policy Implications for Southern Mediterranean Countries

FEM32-01 | December 2008

Title

« Interdependencies of Health, Education & Poverty with Policy Implications for Southern Mediterranean Countries »

By

Ahmed Driouchi, Institute of Economic Analysis & Prospective Studies (IEAPS), Al Akhawayn University, Ifrane, Morocco

Contributeurs

Ahmad Baijou, School of Business Administration, Al Akhawayn University, Ifrane, Morocco; Cristina Boboc, Laboratoire d’Economie d’Orléans (LEO), Orleans, France and Bucharest Academy of Economic Studies, Bucharest, Romania; Mouna Cherkaoui, University Mohammed V, Rabat, Morocco; Lahcen Oulhaj, University Mohammed V, Rabat, Morocco; Nada Zouag & Amale Achehboune, Institute of Economic Analysis & Prospective Studies (IEAPS) Al Akhawayn University, Ifrane, Morocco; Jaouad Kerdoudi, IMRI, Casablanca, Morocco

Note :

This document has been produced with the financial assistance of the European Union within the context of the FEMISE program. The contents of this document are the sole responsibility of the authors and can under no circumstances be regarded as reflecting the position of the European Union.

Summary :

The major objective of this study is to show the importance of interdependencies between health, education and the performance of the South Mediterranean economies (SMC), a region that covers the Arab countries plus Turkey most of the time in this report. The motivation behind the achievement of such objective is mainly related to the determination of the direction of the likely gains that each country can attain when accounting for more integrated social and economic policies. In this process the interdependencies of health, education, employment and other socio-economic factors are considered as the core of this study.

Before pursuing the empirical assessment of the interdependencies, an extensive literature search has been conducted. It has allowed identifying the importance of the topic and the updating of the related issues addressed both in theory and empirically besides the available evidence accumulated about the region of study. This has revealed the existence of important links between different sources of wealth that are health, knowledge, monetary assets and social capital. Furthermore, the importance of non monetary assets (Health, knowledge and social capital) appeared to be at least as important as the traditional economic and financial wealth.

Within the above context, the situation of South Mediterranean countries (SMC) as analyzed and discussed in different publications has benefited from a special attention in order to assess how the concerned specific interdependencies have been assessed. This has revealed the importance of the topic at hand besides confirming the research avenues pursued. It has appeared that SMC are not fully accounting for the interdependencies of health, education and poverty and that their policy making models are most of the time sector oriented. The SMC economies even though can gain from the knowledge about the interdependencies; they can also reduce the existing constraints to allow further access of the population to basic services. The current study has also shown that interdependencies are not fully valued in this context as cross-access to different components is still limited. Given the extent and magnitude of education, health and socio-economic deficits in the SMCs, the identification of the interdependencies generates new avenues for more integrated economic and social policies that can also gain from the reduction of barriers that reduce access to basic services such as health and education.

The results attained are mainly based on the assessment of different panels of data covering the overall region but also some specific countries. These data have originated from different sources that include international and sometimes national databases. Both descriptive statistics and regression analyzes are used to assess the directions and magnitudes of interdependencies. Both regional and country databases have been used. While the regional databases accounted for different socio-economic variables as issued by the available World Bank and UN data, the microeconomic variables have been varying with the sources used. One specific piece of data related to drop out from different school levels has been added to investigate the link with health and economic variables in the 16 regions of Morocco. Other data include Demographic and Health Surveys (DHS) and Computer Monitoring Based Surveys (CMBS) for the case of Morocco as well as other sources such as Country Profile data (Ministry of Finance, France) have been also analyzed.

The results have shown the extent of the likely gains that can be attained when accounting for more integrated policies.  They have also shown the global constraints that limit access and then the expression of full benefits from interdependencies. Furthermore, the limited access to health technologies and related knowledge reduces the level of research and education that could be devoted to enhancing local flows of information for the population to participate to different partial and global programs. The results show also that income poverty is not the major deficit but deficits in health and education are the main reasons for the absence of adequate economic policies capable of generating socio-economic improvements that can create better conditions for access to the basket of the necessary services and goods in the region. Socio-economic factors have appeared to be major drivers of health and mainly the role of education on health behavioral variables. Implicitly limited focus on human development policies has appeared to be among the major factors that affect these economies. This is the expression of limited transversal policies and reduced integration among sectors in the region and in every economy included in this study.

The first chapter focuses on the most important theoretical views that have been underlying the discussion of the interdependencies of health; education and economic performance are still under development. The related empirical applications are also still progressing but are progressively showing the importance of accounting of these interdependencies in different types of economic and social contexts. The central role of the theory that accounts for the different types of assets such as health, knowledge and social capitals besides the traditional economic wealth appears to be promising. It introduces a framework that helps understand both the theoretical and empirical foundations of poverty definitions and assessments. It also shows how health is a major component in the wealth of individuals and countries and that health can be a major source that ensures economic activities through labor productivity. This relationship can then be enhanced with the additions from the other types of assets such as knowledge and social capital.

Attempts to test empirically for interdependencies have been also discussed. They show that major steps have been made to investigate the magnitude of the likely gains to be attained when accounting for interdependent and integrated policies. While causality has not yet been established, major progress is expected in this area.

The assessments that have been achieved for the South Mediterranean countries (SMC) have been expanded through the works of international organizations as well as with the inputs of some individual pioneers. But, further investigations are needed given the deficit of knowledge existing on series of related issues and given the types of specialists needed to cover the missing dimensions.

The second chapter is mainly based on a description of the general methodological guidelines that are used in different parts of the following chapters. These guidelines include descriptive statistics with focus on principal component and factor analyzes besides the other traditional investigations. The methodologies mobilized do also account for simple regression analysis besides the introduction of simultaneous equations with seemingly unrelated errors. Probit and Chi-squared methods are also used for categorical data when analyzing household surveys.

Different types of variables and sub-variables are used depending on the sources of information used. Data are mainly related to cross-sections of countries in the region as published on alternative sources. They also include partial or total databases issued from country surveys. The Demographic and Health Surveys (DHS) are among the most important country household data that have been analyzed.

The third chapter focused on statistical descriptive analysis using regional data. The regression analysis of different clusters concerning the potential relationships between education, health and income measurements helps to come up with the following conclusions.

First, the use of aggregate data such as the “world cluster” to illustrate relationships, without taking care of the different economic, social, regional, and development specificities, leads to contradictory findings. The example of the regression analysis of the children out of primary school illustrates the ineffectiveness of aggregate data since the results of world countries completely contradicts the results of five sub-clusters. Data from sub-clusters, in contrast, improves the efficiency and helps detect the level of significance existing between the GDP per capita and both health and education.

Second, the GDP per capita impact on improving education is not very significant. In fact, the overall conclusion that could be driven from the regression analysis of the education and income indicators is that the relationship significance of GDP per capita is not considerable. In other words, the improvement of education within different clusters does not necessarily require an economic involvement or an increase in the income of the population. The single argument in favor of the importance of the GDP per capita for ameliorating the level of education concerns the literacy rates in middle income countries (mainly SMC, major oil net exporters, and high and medium human development). In general, other arguments than income should be studied in order to enhance education.

Third, in contrast to education, the interpretations of regression tables for health and income indicators proved that GDP per capita is the key for most of clusters. The enhancement of health in different clusters can only occur if it is accompanied by an amelioration of the income level of the population. Alternatively, low human development countries need to focus on other measures than GDP per capita to determine a significant relationship with health issues. The main point of the low human development countries’ health indicators is that the relationship significance varies from year to year. This “instability” can be explained by the rise of new factors that alter health, more than the GDP per capita would do, within a particular period.

The results attained in the fourth chapter are based on the household data contained in the above surveys show consistently the existence of interdependencies among economic, social, health and education variables. This is a confirmation of the results attained under the macroeconomic analyzes. Interdependencies are therefore established at both household, regions, country levels besides the level of SMC. Comparisons have also been made at different stages to investigate the trends taking place elsewhere. These interdependencies are consequently found to be major sources of social gains at both sector and global levels. Besides that, risks related to the expression of the potential gains have been investigated at the level of SMC through testing for the likely impact of brain drain in medical human resources. This has allowed discussing further socioeconomic policies that can accelerate access and adoption of more integrated policies that are more human development oriented. Also, international and regional strengthening of cooperation in the areas of education, health and related social areas is likely to enhance the level of services in each South Mediterranean economy has appeared to be crucial.

The fourth chapter is based on micro-level analysis of variables that focuses on health, education, and wealth at the level of Morocco, Egypt, and turkey. The information collected provides an ample idea about the health, education and wealth in response to economic variation, and other factors that affect health, education and wealth.

Education, health and are influenced by a number of socioeconomic factors which include household characteristics, household resource endowments, access to information and availability of formal institutions. Many variables representing health, education, and wealth were considered..

This chapter explored the interdependency among health, education and wealth which is a proxy variable for poverty using household characteristics with different adaptation measures using a Chi-squared hypothesis testing and a multivariate probit model.

The Chi-squared hypothesis testing showed a significant dependency between health versus, education, education versus wealth with many characteristics concerning health, education, and wealth.

The Probit model allows for the simultaneous identification of the interrelationships between health and education, education and wealth, and wealth and health. Different probit equations were estimated and were valid in explaining the behavior of each dependent variable (health, education, or poverty) with respect to the independent variables (health, education, and poverty). The probit estimated models showed a significant likely interdependency among health, education and wealth through a high probability of occurrence between each dependent variable representing either health, education, or wealth and the independent variables representing either health, education, or wealth. The results of the microeconomic analysis undertaken at the level of Morocco, Egypt, and turkey appear to be quite similar. It may be confirmed from this study that the sectors included are determinants for economic development.  The results attained with Bouaboud and Essaouira data do also help underline the high level of interdependencies between health, education and poverty. These relationships are also confirmed with the consumption expenditures that have appeared to be highly inter-related.

The above results could have been expected because based on household data that are supposed to reflect the types of inter-relations in decision making at the microeconomic levels. But, it is important to reveal the effects of aggregation over countries on these interdependencies. The direction of answer of this question is important as far as country and regional policies are concerned. The persistence of interdependencies at the regional level can be an important signal of consistency between microeconomic and macroeconomic models. The opposite will be a sign of inadequate policies when based on aggregated views. These matters are analyzed in the following chapter.

In the fifth chapter, regression, correlation and granger-tests have been the main techniques used on different data. The first set of data is mainly that of World Bank and that was described in the previous chapter. The second is the most recent database of the UN. The third set is composed of the composite indices provided by different international organizations. The last set is the 2006 institutional profile data of the French Ministry of Finance.

The overall results attained at every level of the analysis are the high magnitude and extent of interdependencies among all sets of variables related to health, education and poverty. Health and education appear to have an important driving effect for these interdependencies.

This is shown through the World Bank data analyzes as well as with the new UN database. The representative variables of health, education and poverty seem to entertain higher levels of interdependencies meaning that any change in one of the variables affect the others. This is confirmed again through the analysis of some composite indices where clear relationships have been estimated. Furthermore, even the subjective appreciations of achievements in different variables related to health, education and economic activities have appeared to show interdependencies.

The results attained so far at the regional and aggregated levels appear to be referring to the real situations faced by households in different countries. This latter has already been shown through the results shown in the previous chapter with household data analyzes.

But, given the type of data used at both country and regional levels, it has been very hard to account for some the issues that are crucial to this study. Some of these issues are tackled in the following chapter.

The sixth chapter has been focusing on some special topics that are directly related to the magnitude and extent of interdependencies of health, education and poverty. These issues have covered the brain drain, the gender, and the rural/urban besides the topic of handicaps. Further results have been consequently attained from the above concerns.

If health were an important matter in the region of study, important risks as that of brain drain may affect the supply of adequate health care under the pressure of limited human resources. These limitations are emphasized when focusing on the role of women and children with their central economic and social roles in different economies. In the context of SMCs further improvements are shown to be needed in relation to the inclusion of women in these economies and societies given the potential gains that each country can attain. Under the pressure of rural versus urban pressures, both men and women suffer relatively from higher levels of deficits in rural areas but urbanization does not reduce the deficits if decent inclusion policies were absent. While handicaps originate not only from genetic concerns, these latter appear to be important and require further identification and communication with the poor segments of the population.

The seventh chapter shows how it is definitely clear that the situation of the poorer segments of the population in SMCs can improve if further policy coordination and integration is pursued. The directions of further coordination appear to have been provided by the international framework that accounts on achieving MDGs by 2015. It is also provided by the orientations focusing on human development. The recent reforms undertaken seem to be mainly focusing on economic and political components while accounting for social components as a residual sector that should be considered with the implementation of reforms. The overall policy schemes that are driven by both international organizations and by the domestic reforms, cannot lead to the needed policy integration if not based on ownership and domestic generalization of these policies to different country locations. Furthermore, specific transversal policies focusing on women, children and older segments of the population need further strengthening. More inclusive health and education policies with gender and rural focus can be promising in the region. Preventing and accounting for the existence of handicapped segments of the population are also dimensions that require inclusion within the socially coordinated policy packages.

The last chapter plays the role of an overall conclusive part. It focuses on the results attained in each chapter with their expansion to include some poverty issues such as risk and missing dimensions. It also discusses the importance of the results in poverty alleviation programs with the central roles of education and health. Besides local development, the role of women is highly stressed with the importance of transversal policies.