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In developed nations, diarrhea is a pain, an annoyance, and, of course, an embarrassment. In much of the developing world, diarrhea is a killer, especially of children. Every year 1.8 million children die from diarrhea. To prevent the deaths of these children, we do not need any scientific breakthroughs, nor do we need new drugs or fancy medical devices. What these children need most is one thing: economic growth.

Economic growth brings piped water and flush toilets, which together cut infant mortality from diarrhea by 70% or more. Malaria, measles, and infections also kill millions of children a year. Again, the lesson is clear; millions of children are dying who would live if there were more economic growth.

Figure 7.1 illustrates how health and wealth go together. The vertical axis shows GDP per capita and the horizontal axis shows infant survival rates: how many children, out of every 1,000 births, survive to the age of 5. In the United States, one of the world’s richest countries, 993 out of every 1,000 children born survive to the age of 5 (i.e., 7 out of every 1,000 die before the age of 5). In Liberia, one of the world’s poorest countries, only about 765 children survive to age 5 (i.e., 235 of every 1,000 children die before seeing their fifth birthday). The graph illustrates a strong correlation between a country’s GDP per capita and infant survival. The size of each country’s data bubble is proportional to the population of that country; notice that India and China each have populations of more than 1 billion people so economic growth in these countries has the potential to save millions of infants from an early death.

Infant health and wealth tend to move together; indeed, just about any standard indicator of societal well-being tends to increase with wealth. Infant survival rates, life expectancy, and nutrition (caloric intake levels), for example, all tend to be higher in wealthier nations. Educational opportunities, leisure, and entertainment also tend to be higher in wealthier nations. Wealthier nations even have fewer conflicts such as civil wars and riots. And, of course, wealthier nations have more material goods such as televisions, iPhones, and swimming pools.

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Wealth is clearly important so we want answers to the following questions. Why are some nations wealthy, while others are poor? Why are some nations getting wealthier faster than others? Can anything be done to help poor nations become wealthy? The answers to these questions are literally a matter of life and death. In this chapter and the next, we will try to answer these questions.