Haas Newsroom

Does Trade Affect Child Health?
UC Berkeley Haas School of Business Professor David Levine Finds Benefits of Trade for Child Welfare

June 15, 2006

Media Contacts:
Ute S. Frey
UC Berkeley Haas School of Business

Ronna Kelly
UC Berkeley Haas School of Business

Some critics of globalization have focused on the impact of trade on health, arguing that trade openness increases macroeconomic instability and reduces government spending on health and education. But two professors who recently investigated the impact of trade openness found some potential benefit for children’s health.

UC Berkeley Haas School of Business Professor David I. Levine and Columbia University Mailman School of Public Health Assistant Professor Dov Rothman found openness to trade predicts slightly reduced rates of infant mortality and malnutrition (as measured by stunting, that is, very low height for age). Levine, also chair of UC Berkeley’s Center for Health Research and research director of Haas’ Center for Responsible Business, and Rothman outlined the results of their work in the article “Does Trade Affect Child Health?” in the latest issue (May 2006) of the Journal of Health Economics.

“This question goes to the center of the debate about globalization,” the authors write. “We do not find evidence that trade has the dire consequences sometimes ascribed to it by critics of globalization.”

In their study, Levine and Rothman predict how much countries trade, based on geographic features of a nation such as whether it has a coastline. This model has previously been used to measure the relationship of trade openness to economic growth, pollution, and child labor. Here, Levine and Rothman measure the relationship of trade openness to three measures of children’s health: mortality rates for infants and children up to age 5 and anthropometric measures of child stunting (low height for age) and wasting (low weight for height).

They find that for the average country, a 15-percentage point increase in predicted trade as a share of GDP corresponds to approximately four fewer infant deaths per 1,000 births and four fewer deaths before age 5 per 1,000 births.

Similarly, the authors find that stunting in ages up to 5 years old is lower in nations that trade more. They find that a 20-percentage point increase in trade as a share of GDP reduces stunting by roughly 7 percentage points.

But they find no statistically significant results for wasting (low weight for height). That result was expected because wasting is typically related to recent shocks to nutrition and illness, while stunting largely involves persistent shortfalls in nutrition and or a high disease burden.

The authors also find a link between an increase in trade to higher life expectancy, with a 20 percentage increase in trade as a share of GDP raising life expectancy by roughly a half year.

Levine and Rothman note that trade might affect children’s health in a number of different ways. For instance, economic theories since Adam Smith have predicted trade increases income, and income improves health through improved nutrition for mothers and children, improved access to clean water, and improved access to health care.

On the other hand, they note that critics of such organizations as the World Bank emphasize cases where international institutions pushed governments to reduce spending on social services. And openness can also spread infectious disease, as seen by the European arrival in the Western Hemisphere more than 500 years ago and the spread of HIV/AIDS along many highways.

Finally, trade openness could mean openness to culture influences. “If openness brings greater recreational drug use, more consumption of Coca-Cola, and less breastfeeding (in the pre-HIV epidemic era we study), then, openness might reduce children’s health,” the authors write.

But in examining potential ways that trade might affect children’s welfare, Levine and Rothman find that increased trade predicts not only higher life expectancy but also higher immunization rates for measles and larger expenditures on public health as a share of GDP.

“Thus, there is no evidence here that openness starves the public health portion of the public sector,” the authors conclude.

The authors analyzed data for 100 to 130 countries from a number of sources, including the World Health Organization, the World Bank’s World Development Indictors (1990), and actual and predicted trade shares from researchers J. Frankel and D. Romer (1999, 1985). The data, it should be noted, were from a period before the HIV/AIDS pandemic had macroeconomic effects.