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# b. Growth and other welfare indicators

Per capita income shows a high degree of correlation with social indicators such as life expectancy, daily calorie supply, low birth weight, secondary enrollment, infant mortality, maternal mottality, and access to safe drinking water and sanitation services (table 4). The correlation is less strong between income and the crude death rate, population per physician, primary enrollment, and literacy ratios. There is also a correlation between percent changes in calorie supply, population per physician, and infant mortality and income growth, while percent changes in primary and secondary enrollment, literacy, life expectancy, and the crude death rate are essentially uncorrelated with growth.” Simple correlations may understate the relation between social indicators and income because the relationship may be nonlinear, as suggested by Ingram (1989). He confirmed a statistical relationship that implies that life expectancy, primary enrollment, and daily calorie intake improve rapidly as income rises from low levels, then level off as income rises beyond a certain middle income threshhold. This is plausible since these indicators are inherently bounded. This helps to explain Ingram’s finding of strong unconditional convergence across countries in social indicators, even though he finds no evidence of unconditional convergence in incomes.

However, there are sizvable outliers to the income-social indicator relationship. The WDR 1990 noted a striking phenomenon -- a major improvement in life expectancy and primary enrollment in Africa over 1965-85 despite negative growth in per capita consumption.* Conversely, Pakistan registered little improvement in net enrollment over 1965-85 (it was still only 43 percent in 1985) despite per capita growth of 2.5 percent over the period.” The relationship between growth and improvements in social indicators supports the study of growth as a generally useful proxy for broader notions of welfare improvement. However, the existence of large outliers suggests an examination of factors that can cause social improvement and growth to diverge. Social indicators to some extent reflect conscious choices made by the government and by private individuals. For example, the allocation of public expenditure has a major impact on many indicators. In each of the policy studies, we will develop one or more social indicators to be tested as dependent variables along with per capita growth as functions of policies. Some of the social indicators may also be proxies for the level or rate of accumulation of human capital, which suggests their inclusion on the right hand side of those equations that also include physical capital investment.

“Work for the 1991 WDR by Surjit Bhalla found reasonable correlations between changes in per capita income and changes in educational attainment, infant mortality, and political liberty, although the last correlation is rather weak. However, he cites other studies that claim a high correlation between per capita income and political and civil liberty (Dasgupta and Weale (1990), Scully (1988)). Looking at infant mortality, the 1991 WDR found evidence that both income growth and government health expenditure explain its decline in developing countries (King and Rosenzweig (1991), Bhalla and Gill (1991)). Correlations between changes in indicators can be seen as a stronger test of association given the possibility of spurious correlations between variables with trends.

“WDR 1990, p. 40 Another social indicator, per capita daily calorie supply, did fall in 16 African countries over 1965-86. (WDR 1990, table 28).

*ipid., p. 43.