The Epidemic Effect: Global Governance Institutions Mitigate the Effects of Epidemics

Abstract

Epidemics can have deleterious effects on economic development except mitigated through global governance institutions. We examine the effects of sudden exposure to disease on economic outcomes using evidence from the African meningitis belt. Meningitis shocks reduce economic activity and child health outcomes in periods when the World Health Organization (WHO) does not declare an epidemic year. These effects are reversed when the WHO declares an epidemic. We find evidence that the influx of disaster aid in response to WHO declarations may partly explain the results. We document an increase in World Bank health projects approved and funded during epidemic years.

Keywords: Epidemic, Disease, Meningitis, Night Lights, Human Capital, Aid, WHO, World Bank

JEL Classification: I15, I18, I24, H84, J16, O12