ECONOMIC GROWTH CENTER
                                
                       YALE UNIVERSITY
                                
                       P.O. Box 208269
                     27 Hillhouse Avenue
                   New Haven, CT 06520-8269
                                
  
               CENTER DISCUSSION PAPER NO.  787
                                
  
  
  
            ECONOMIC GROWTH AND HUMAN DEVELOPMENT
                               
                                
  
                      Alejandro Ramirez
              United Nations Development Program
                               
                               
                         Gustav Ranis
                       Yale University
                               
                               
                       Frances Stewart
                      Oxford University
                               
                               
                               
                               
                               
                        December 1997
                                
  
  
  
Note: Center Discussion Papers are preliminary materials circulated to
      stimulate discussions and critical comments.


              Economic Growth and Human Development
                               
       by Alejandro Ramirez, Gustav Ranis and Frances Stewart 
                               
                               
                           ABSTRACT
                                
This paper explores the links between economic growth and human development,
identifying two chains, one from economic growth to human development, the
other, from human development to economic growth. The importance of various
links in each chain are explored empirically with the help of cross-country
statistics for the period 1970-92. Public expenditures on health and
education, notably female, represent especially important links determining
the strength of the relationship between economic growth and human
development. The investment rate and income distribution are significant
links determining the strength of the relationship running from
development to economic growth. 
  
These two-way chains can generate self-reinforcing, virtuous or vicious
cycles of development, as well as identifying lop-sided performers.
Over time we find that lop-sided development seldom persists: countries
initially in favor of economic growth lapse into the vicious category,
while countries favoring human development advance into the virtuous
category. This finding implies that, although both human development and
economic growth should be jointly promoted, human development should
be given sequential priority.

  
Keywords: Human Development, Economic Growth, Cross-country Statistics
          70-92, Resource Allocation, Income Distribution, Poverty,
          Productivity, Health, Technology, Education
  
JEL Codes:  O10, O11, O15, O57