Health and Wealth of Nations

5 min readDec 14, 2018

Which countries are going to be prosperous? How are they faring today? Do they need a hand joining the ranks of the developed countries? How do we help them? To answer these questions, we need data. From the CIA Factbook, I downloaded HTML files and processed them to get at the health and wealth data for countries.

Our health and wealth indicators are:

GDP per capita for wealth
Infant mortality rate + HIV/AIDS prevalence in adults for health

Let’s look at wealth first.

Which countries are going to be prosperous?

This image shows the correlations between the GDP per capita of a country against indicators that could affect this GDP. The higher the correlation, the stronger the effect. The indicators with the highest correlations (0.2 or greater) are:

Exports in USD
Imports in USD
Budget Revenues
Budget Expenditures

The only high negative correlation is:

Unemployment rate

Notice that the Exports per capita, and Imports per capita are not as high. They are calculated by dividing the Exports by the Population. If the GDP per capita increased, and the Exports increased, but the Population increased more, the correlation will be less.

There are three columns of correlations in this figure. Linear correlation values are higher when a unit change in one indicator always has the same fixed change in the other. They move in lock-step.

Rank correlation is calculated by:

sorting one indicator (thus ranking it), and
comparing it to how sorted the second indicator looks

Monotonic correlation is higher if both indicators rise together - even though they rise at different rates. Think of this as sorting the first indicator, and checking if the second indicator keeps going up.

The world is a very complicated place — especially when it comes to analyzing countries. We’re not considering the power struggles inside the country, the ups and downs of the stock market, natural disasters, etc. Within a country, not everyone is aligned in the same direction. Most people want to have more wealth, but how to get there may impede the progress of others. It’s surprising that even then there is some correlation. A correlation of 0.2 is not amazing, but still surprising.

Interpretation

Wealth of a nation is a zero-sum game. You can buy goods from someone else within your country, and money just changes hands. The wealth of the nation has not increased because of it.

One way to increase a nations’ wealth is to provide goods and services to other nations. Exports make a nation wealthier.

Companies invest this incoming revenue locally to get better efficiencies. Better efficiencies will allow them to keep more of what they earn from their trade.

Companies spend on industrial equipment from developed countries to increase their efficiency. This is why Imports are linked to a nations’ wealth.

When companies earn more, they’re taxed more by the government. This is why the government Budget Revenues are correlated with the nations’ wealth. When a government earns more, it spends more. This causes Budget Expenditures to go up.

The Unemployment Rate is the percentage of people unemployed. An increasing Unemployment Rate will decrease the GDP per capita, and this is what our data shows.

Which countries are going to be healthy?

Change in Health has the most positive correlation with the GDP per capita (around 0.2). It even has some linear correlation (around 0.1).

All other correlations show up as Monotonic correlations.

The External debt has a 0.2 correlation with change in health. A country borrowing from others will spend some of its money on its citizens health. This is the same with External debt per capita.

Population has a negative correlation with change in health (around 0.2). If your population is growing, the amount of money you can spend per person for health is decreasing.

Industrial Production growth rate is also negatively correlated with health (around 0.2). This is not surprising given that our health indicators are:

Infant mortality rate plus. With parents going to work, there will be less focus on children.
HIV/AIDS prevalence rate in adults. More people working together means more chances of relationships and more chances of HIV transmission.

How are countries faring?

This is how the overall health and wealth of countries looks like:

Notice that most countries are showing increases in wealth. There is about a 50–50 split on countries whose health is increasing and those whose health is decreasing.

Health data at the CIA Factbook site was only for:

Infant mortality rate
HIV/AIDS prevalence in adults.

Of course that is not all there is. The developed countries face obesity related heart disease and diabetes. This data was not available to us.

What does the change in health of countries look like?

Half of the countries are losing health. If their health is decreasing, and their wealth is increasing, are they trading health for wealth? It could also be that by being healthy, they’re eating more rich food, and getting less exercise. More data is needed to find out.

The other half of the countries are gaining health, so that is the good news.

Let’s dig into the wealth data to see how it is spread across countries.