Basic needs fulfillment and economic growth: A simultaneous model

The relationship between basic needs fulfillment and productivity change is examined using a growth model which is explicitly simultaneous in national output and generalized measures of health, nutrition, and education. Consistent and relatively efficient parameter estimates are obtained through the application of three-stage least squares, using data from a large sample of poor countries in Africa, Asia, and Southern America. The results give support to the hypothesis that changes in basic welfare are strong contributors to labor productivity change, and conversely. In addition, they suggest substantial differences in the pattern of simultaneous interaction at different income and welfare levels.