Abstract: This paper examines the link between health indicators, environmental variables and economic development, and th e consequences of this relationship on economic convergence for a large samp le of rich and poor countries. While in economic literature income and envi ronment are seen to have an inverted-U shaped relationship (Environment Kuznets Curve hypothesis), it is also well established that an improvem ent in environmental quality is positively related to health. Our study focuses on the implica tions of this relationship for economic convergence. In the early stage of econom ic development, the gain from income growth could be cancelle d or mitigated by envir onmental degradation through populations' health (and other channels) and create a vicious circle in economic activity unlike in developed countries. This in turn could slow down economic convergence. To empirically a ssess these issues, we proceeded to an econometric analysis through three equa tions: a growth equation, a health equation and an environment equation. We found that health is a channel through which environment impacts economic growth. When we take into account the effect of environment quality on economic growth, the speed of convergence tends to increase slightly. This shows that environmental quality could be considered as a constraint for economic convergence.
Keywords: Environmental quality, Health indicator, Income growth, economic convergence, speed of convergence
Recieved: 18.09.2009 Accepted: 24.02.2010 UDC: 338.31:502