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CHALLENGING THE CONSENSUS: REFLECTIONS ON ECONOMIC GROWTH, INCOME INEQUALITY AND INFANT MORTALITY FROM THE PERSPECTIVE OF JORDAN AND NEW ZEALAND

Sevda Madatova

A thesis submitted in partial fulfilment of the requirements

for the degree of Master of Arts in Development Studies,

The University of Auckland, January 2007

Abstract

By taking Jordan as the main object of the analysis and treating New Zealand as a comparator, this hypothesis-driven study has tested several widely-held assumptions in existing literature concerning the relationship between economic growth and infant mortality, and income inequality and infant mortality in both developing and rich industrialised countries, and questioned a widely-held position according to which the improvement of health outcomes in developing countries should be implemented through reducing absolute poverty. By taking the example of Jordan, with its substantial reduction of infant mortality between 1981 and 2000, this study, investigated the major driving forces behind this reduction. The findings of this study indicated that the major force behind the decline in infant mortality in Jordan was the government’s commitment to investment in health supported by pro-growth policies rather than the decrease in national levels of absolute poverty. The results of this study have contradicted a popular perspective according to which the reduction of absolute poverty is a necessary action to significantly improve health outcomes in developing countries. Taking the example of Jordan, the main conclusions of this study have been as follows: 1) economic growth is an important factor in reducing infant mortality rates in developing countries provided there exist appropriate institutions that ensure the beneficial impact of economic growth on population health. 2) in order to reduce high rates of infant mortality, equalisation of income distribution and reduction of absolute poverty need not always be the highest priority on the early agenda in developing countries.

Key words: infant mortality, economic growth, income inequality, government expenditure on health, absolute poverty, developing countries, rich industrialised countries, Jordan, New Zealand.

Acknowledgements

Many people have given their valuable help and advice in the writing of this thesis and it is virtually impossible to mention the name of every person who has contributed to this study. However, I would like to single out my supervisor Associate Professor Ken Jackson for his support and insightful comments during my writing of this thesis. I would also like to extend my thanks to Dr. Jens Hansen and Lynn Lavery for their valuable advice and assistance in choosing the research methods for this study. I am also indebted to Professor David Hojman from the University of Liverpool for sending me his research study of income inequality that was very useful to this study.

I would like to acknowledge the valuable help of Development Studies librarian Philip Abela for the training and advice on how to get hold of various materials and data that were used in this research. I would also like to express my gratitude to our Departmental Administrator Hilary van Uden, for her kind support and help in various administrative issues. Thank you very much to Dr. Barry White from the Student Learning Centre for his invaluable feedback on my thesis and to Dr. Bill Flinn for his advice on statistical methods that were used in this study.

Thank you to all Development Studies students who have shared their experiences with me and supported me. To my new friends in New Zealand: Elvira, Upolu and Alison, I want to say thank you very much guys, your kind support throughout this year was of huge help to me. I am also indebted to my family, without whose constant moral support, I would not have been able to complete this thesis. To my family and friends, I dedicate this thesis with my gratitude and thanks.

Table of Contents

Abstract ii

Acknowledgements iii

List of Figures v

List of Tables vi

Chapter 1: Introduction and Overview 1

Chapter 2: Literature Review and Research Scope 8

2. 1 Some Perspectives in the Literature on Infant Mortality 8

2. 2 Economic Growth and Infant Mortality 15

2. 3 Income Inequality and Infant Mortality 25

2. 4 Conclusions from the Reviewed Literature 37

2. 5 Scope of the Study 38

2. 6 Jordan and New Zealand in the Literature 42

Chapter 3: Data, Variables and Methods 45

3. 1 Variables and data 45

3. 2 Variable bias 47

3. 3 Methods 48

Chapter 4: Research Results 51

4. 1 Hypothesis 1 51

4. 2 Question 1 54

4. 3 Question 2 57

4. 4 Hypothesis 2 58

4. 5 Hypothesis 3 58

Chapter 5: Discussion and Conclusions 60

5. 1 Economic Growth and Infant Mortality in Jordan 61

5. 2 Income Inequality and Infant Mortality in Jordan 75

5. 3 Conclusions and Policy Implications 83

Appendices 88

List of References 90

List of Figures

Figure 1. The relationship between real GDP per capita and infant mortality rates in Jordan for the period (1981-2000). 51

Figure 2. The relationship between real GDP per capita and infant mortality rates in New Zealand for the period (1981-1990). 52

Figure 3. The relationship between real GDP per capita and infant mortality rates in New Zealand for the period (1991-2000). 53

Figure 4. The relationship between poverty ratio and infant mortality rates in Jordan for the period (1981-2000). 55

Figure 5. The relationship between per capita government expenditure on health and infant mortality rates in Jordan for the period (1981-2000). 56

Figure 6. The relationship between income inequality and infant mortality rates in Jordan for the period (1983-2000). 57

Figure 7. The relationship between income inequality and infant mortality rates in New Zealand for the period of (1991 -2000). 59

Figure 8. Real GDP per capita in Jordan for the period (1981-2000). 65

Figure 9. Infant mortality rates in Jordan for the period (1981-2000). 65

Figure 10. Poverty ratio in Jordan for the period (1981-2000). 72

Figure 11. Income inequality in Jordan for the period (1983-2000). 79

Figure 12. Per capita government expenditure on health in Jordan for the period (1981-2000). 79

List of Tables

Table 1. Some research on the relationship between average incomes and health outcomes. 16

Table 2. Some research on the relationship between income inequality and health outcomes. 27

Chapter 1: Introduction and Overview

By taking Jordan as the main object of the analysis and treating New Zealand as a comparator, this study has tested several common assumptions in existing literature concerning the relationship between economic growth and infant mortality, and income inequality and infant mortality in both developing and rich industrialised countries. This thesis has also challenged one of the most conventional wisdoms in existing literature, that the reduction of absolute poverty is a necessary policy action for the improvement of health outcomes in developing countries.

In spite of the fact that the studies on infant mortality and its numerous determining socio-economic factors have been plentiful, they have not reconciled polar standpoints about how this problem needs to be solved in developing countries. The adoption of uniformly agreed development policies for the reduction of high rates of infant mortality would not be a wise decision in many developing countries given the different socio-economic, political, environmental and cultural settings. On the other hand, the findings of some research studies have shown that certain policies pursued by some developing countries have not been effective in battling high rates of infant mortality. It goes without saying that policies for reducing high rates of infant mortality in developing countries must take into consideration local economic, social, cultural, environmental and political factors. However, this does not mean that there should not be any attempt to create a universal theoretical framework that could explain which factors are the most important and which policy actions could be the most effective in decreasing infant mortality at certain stages of economic development. This framework would help to shape different policies to achieve a fast and sustained decrease in infant mortality in developing populations. In this context, this study is important as, even though it has not proposed any brand-new solutions to tackle this problem in developing countries, it has attempted to make its own contribution to several highly debated topics surrounding infant mortality. By using the example of Jordan with its substantial decrease in infant mortality between 1981 and 2000, this study has contributed to the understanding of the relationship between economic growth and infant mortality, and income inequality and infant mortality in developing countries.

Economic growth and income inequality were chosen as explanatory variables in this research study because these factors have instigated the most fervent debates in the existing research. Numerous studies have come to different conclusions about the roles of economic growth and income inequality in affecting infant mortality. At the same time, certain assumptions concerning the relationship between economic growth and infant mortality, and income inequality and infant mortality at certain stages of economic development have found their niche in existing literature. This study has critically assessed these widely-held assumptions by testing them against the examples of Jordan and New Zealand. Considering the examples of two countries with such different income levels (World Bank, 2006) has not enabled this thesis to reconcile the opposing perspectives or totally undermine the most popular assumptions in existing literature. This research study has contributed to the discussion by providing a clear framework for future policies and health development strategies to battle high rates of infant mortality in developing countries.

In spite of the fact that infant mortality has “a multivariate nature” (Preston, 1982, p. 176), economic growth is one of the most important processes influencing the trend in infant mortality in developing countries. Average income is one of the most significant indicators to explain cross-country variations in infant mortality. Many countries classified in general literature as developing not only have much higher infant mortality rates than rich industrialised ones, but also, as Ravallion (1997, p. 637) has suggested, fail to achieve high rates of economic growth. Nevertheless, a growth-oriented strategy is not uniformly recommended for developing countries as a means to reduce high rates of infant mortality and achieve other human development objectives. The main assumption of the sceptics of growth-oriented development is that economic growth is not effective when it comes to the improvement of health outcomes in a developing world. At the same time, one of the topics which have not inspired much debate in existing literature is the role of economic growth in determining infant mortality in rich industrialised countries. By including New Zealand, a rich industrialised country, in the analysis as a comparator to Jordan, this study has rekindled discussion about the role of economic growth in reducing infant mortality rates in developed countries

Although economic growth is necessary to achieve a higher level of human development in developing nations, simply claiming that economic growth, by itself, is a solution to the problem of high infant mortality in developing countries fails “… to avoid ill-consequences of over-simplification” (Toye as cited in Corbridge, 1995, p. xiv). For this reason, this study has also reflected on the importance of some of the main routes through which economic growth can impact on infant mortality in developing countries. At the centre of the discussion is the relative importance in the change in national levels of government spending on health and absolute poverty to the trend in infant mortality in Jordan between 1981 and 2000. By taking on board this objective, this study has had its own say in the discussion as to whether the reduction of absolute poverty is a necessary step towards the improvement of health outcomes in developing countries.

The widely-advocated position according to which the reduction of absolute poverty is a necessary starting action towards the substantial improvement of health outcomes in developing countries, has gained popularity in literature in recent years. Gwatkin (2000, p. 5) has highlighted a growing interest within the international community directed at poverty as one of the most important factors that affect population health in developing countries. However, it is one thing to assume that the reduction of absolute poverty is important when it comes to the reduction of high rates of infant mortality in developing countries and quite another to assert that the reduction of absolute poverty should be on the top of development agenda in order to improve health outcomes in developing nations. The belief that poverty reduction must be one of the initial steps towards the improvement of health outcomes in developing countries must be corroborated by the empirical and theoretical evidence. This study does not totally undermine this assumption but converts the vehement propositions of some scholars and international development agencies into a constructive debate that can be continued by future studies.

Corbridge (1995, p. xvi) has suggested that the discipline of Development Studies can be viewed as a vital set of debates about the issues and achievements of poor countries and populations, and about the different policies that might be adopted to tackle their problems. A conventional study belonging to the discipline of Development Studies does not necessarily advocate a development perspective which the empirical results would support. As Corbridge (1995, p. xii) has argued, every approach to development issues has its own strengths and weaknesses. This thesis is mainly a hypothesis -driven study that not only upgrades the understanding of the association of infant mortality with economic growth and income inequality in developing countries using the example of Jordan, but also offers an additional view of the role of economic growth in improving health outcomes in developing countries. The objective of this study corresponds with one of the goals of Development Studies which is to ignite a debate that not only helps to broaden the existing knowledge about various development issues but also shackles various conventional wisdoms, the existence of which can negatively affect development practice and research.