Trade and Health Linkages: A Global Panel Data Analysis Using the Gravity Model

Abstract

This paper provides empirical evidence on the effect of trade openness on child health using the data from 171 countries between the mid-1990s to mid-2000s. Using an instrumental variable approach with a geographic gravity model framework, this study finds that a 1% increase in openness leads to a 0.2% decrease in infant mortality rates across countries, which at the sample mean is about 8 infant deaths per 1000 live births. The result is robust to country-specific time-invariant heterogeneity as well as outliers. The main channels of operation seem to be through increasing incomes, increasing health expenditures, and decreasing inequality.