The necessary information collected from various sources was analyzed. D student of economics in igbinedion university okada, edo state, nigeria and d. This paper examines causal relationships between health expenditureand gdp for iran using annual data over the period 19702008. Olugbeng and owoye 2007 investigated the relationships between government expenditure and economic growth for a group of 30 oecd countries during the period 19702005. Economic growth is the most powerful instrument for reducing poverty and improving the quality of life in developing countries. Firstly, if health expenditure can be regarded as an investment in human capital, and given that human capital accumulation is an essential source of economic growth, an increase in health care expenditure must ultimately lead to a higher gdp. It is confirmed that the health expenditure and economic growth are cointegrated in all the four indian states. Health expenditure, human capital, and economic growth. In the light of high oop expenditure in low and lowermiddle income economies, the access to universal health coverage uhc is felt most urgently which is also emphasised in sustainable development goal 3. Health expenditure, education and economic growth in mena countries miloud lacheheb1, norashidah med nor1, imdadullah baloch1 1department of economics, faculty of economics and management, universiti putra malaysia, upm, serdang, selangor, malaysia.
Public expenditure on health and nigeria economic growth 19812016 pdf. Public expenditure on health and economic growth in. Research article bending the cost curve health affairs vol. In addition, a longrun relationship also exist between health expenditure and economic growth for both groups of countries. Abu and abdullah 2010 investigates the relationship between government expenditure and economic growth in nigeria from the period ranging from 1970 to 2008. With regards to the influence of co 2 emissions on health expenditure, we have found a negative impact in the shortrun and a positive impact on the longrun. The share of gdp spent on health ranges from a low of 1. Health spending measures the final consumption of health care goods and services i. According to the study conducted by othman 2012 on the impact of total government expenditures and economic growth in zanzibar, said that d. In countries with medium and high levels of economic growth, the influence of health care expenditure growth on economic growth is positive. The results suggested that there is a longrun relationship between health expenditure and economic growth.
He inferred from this result that the direct effect of health expenditure on growth is a flow and not a stock effect. Pdf on jun 1, 2019, syeda anam fatima rizvi and others published health expenditures, institutional quality and economic growth find, read and cite all the research you need on researchgate. Investigating the dynamic effect of healthcare expenditure and. Expenditure on economic growth in organisation of islamic countries. Pdf health care expenditure and economic growth in. We also explain the heterogeneity in empirical results. Methods and specifications existing studies have examined various aspects of the health expenditure economic growth nexus.
Technology growth and expenditure growth in health care. Air pollution, economic growth and health care expenditure. The existing theoretical literature such as wagners theory of government expenditure, keynes theory of public expenditure, and musgraverostows theory showed that government expenditure enhances economic growth but this seems to be at variance with empirical findings in nigeria. Thus african economies are strongly advised to achieve the abuja target especially when other socio economic and political factors are efficient. We concluded that the share of health expenditures to gdp decreases with gdp. Investments in health through programmatic and financial commitments by the public sector can help. The total health expenditure as a percentage of gdp and health outcomes in the region of south asian association for regional cooperation saarc and association for south east asian nations asean are lower than that of the oecd region and the world. Health expenditure, education and economic growth in mena. In countries with medium and high levels of economic growth, the influence of expenditure growth on economic growth is positive. This study examined the relationship among health expenditure, health outcomes and economic growth in nigeria for the period between 1981 and 2017. Theoretically, health is a determinant of human capital, and labor productivity. For 202027, national health spending growth is projected to average 5. The augmented dickey fuller unit root test, johansens cointegration rank test and the granger.
Our results based on random effect estimation endorse a relationship between health expenditure, education. The relationship between health expenditures and economic growth. In sum, health affects economic growth directly through labor productivity and the economic burden of illnesses, for example. This paper examined the nexus between health care expenditure and economic growth in subsaharan africa over the period 19952014. Another study by aguayorico and iris 2005 examines the impact of health on economic growth for european countries, 12 african countries, 16 american countries, and 11 asian countries over the period. The effect of public expenditure on the economic growth. More health expenditure, better economic performance. Using a sample of 306 estimates drawn from 31 primary studies, this paper conducts an empirical synthesis of the link between economic growth and government expenditure on education or health using metaanalysis. Pdf highlights the health expendituresgrowth nexsus is investiagted in g8 countries. Pdf health expenditure and nigerian economic growth. This implies that, increasing expenditure on health can be a very important mechanism to increase the quality of human capital and thus economic growth, however this is not a direct mechanism where increase health expenditure will translate to economic growth, the necessary institutional framework have to be efficient and corrupt free to spur economic growth.
They found that public investment and expenditure on health care and education have a shortrun impact on the growth rate of real nonoil per capita gdp. This study investigated the relationship between different types of healthcare expenditures public, private and total and three main health. The results show that health human capital is a significant determinant of longrun economic growth in ssa. Reprint pdf 360kb healthcare expenditure and economic growth in developing countries. According to carboni 2011 the linkage between public expenditure and economic growth is affected by the.
The data used in the study were sourced from central bank of nigeria cbn statistical bulletin. Government health expenditure and outofpocket payments follow different paths. Health expenditure is thus a significant drain on poor households resources and significantly impairs their human capital, which has further negative bearing on economic growth. The relationship between public spending on health and economic. Maysam musai, faculty of social sciences, university of tehran. Thepace of health expenditure growth is also different for countries at different levels of economic development. The relative effects of economic growth, environmental. The hypothesis that health has both a direct and indirect e. Health expenditure, co integration, unit root, panel data, economic growth, mena jel classifications.
Thus, phe finds space in our study as a proxy of health welfare. Healthcare expenditure and economic growth in developing. Even though, the findings indicate that health expenditure and gdp are co integrated. Others had insignificant influence on economic growth. Key economic and demographic factors fundamental to the health sector are anticipated to be the. The impact of health expenditure on the economic growth in. The main goal of this paper is oriented on examining the potential link between economic growth and health expenditure in the southeastern european health network seehn countries over the. Hall bureau of economic analysis working paper wp20193 an updated analysis of the roles of cost per case and treated prevalence in health spending growth pdf charles roehrig and craig lake bureau of economic analysis working paper wp20178. Nasiru and usman 2012 used ardl bounds test and granger causality test to examine health expenditure and economic growth in nigeria from 1980 to 2010. The paper examined the impact of health care expenditure on economic growth in nigeria for the period of 1980 to 2016. Then the paper develops models of the interplay between health and growth. The augmented dickey fuller unit root test was used to check for maximum order of integration of the variables used in the study and the result was one while. It is therefore necessary to develop effective and efficient health care programs, increase health expenditure, make an effective use of the young population and create better environment for foreign direct investment in order to foster economic growth in subsaharan africa.
We utilise macroeconomic data corresponding to inflation, government expenditure, trade and schooling in sample countries that takes. Health expenditure trends in oecd countries, 19902001. There is a significant relationship between health care expenditure and economic growth in nigeria. We find that the effect of government education expenditure on growth is positive, whereas the growth effect of government health expenditure is negative.
Trends in expenditure growth relative to gdp for oecd countries on average, the share of gdp devoted to health care increased markedly in 2001 after a period of relatively stable health care expenditures ratios table 1 and figure 1. Effects of government education and health expenditures on. Health spending could outpace economic growth growth trends have not been homogenous. Analysis of the growth impact of health expenditure in nigeria. Health spending back on a growth path after the slowdown. Pdf health care expenditure and economic growth in nigeria. This chapter describes health expenditure trends in the context of a decade of low. Human capital, health expenditure, economic growth, abuja declaration. The ols technique employed found that government expenditure has a. Poverty alleviation and the economic benefits of investing in. Hashmati used the solow growth model to investigate the relationship between health expenditure and economic growth using a sample of organisation for economic cooperation and development oecd countries from 1970 to 1992, he came to a conclusion that there was a positive relationship between health expenditure and economic growth. While keynes 1936, njoku and nwaeze 2014 maintain that economic growth is the outcome of government expenditure, egbetunde and fasanya 20 using bounds testing ardl approach showed the impact of total public spending on growth to be negative.
The findings reveal the existence of a positive and a statistically significant relationship between the two variables, precisely. On the other hand, economic growth was found to granger cause capital expenditure, both in the short and long runs. Economics of aging, health care, health economics, productivity, innovation, and entrepreneurship. The results also showed no evidence of causality between capital expenditure and economic growth over both. The results show that the use of renewable energy in logistics operations will improve environmental and economic performance to reduce emissions, whereas environmental performance is negatively correlated with public health expenditures, indicating that greater environmental sustainability can improve human health and economic growth. Apr 11, 2016 conversely, ill health produces poverty and hinders economic growth, while poverty drives ill health in low, middle and highincome countries alike deaton, 2016, creating a vicious cycle. Technology growth and expenditure growth in health care amitabh chandra, jonathan s. Oluwatobi and ogunrinola 2011 also studied the impact of capital and recurrent expenditure on education and health human capital and their effect on economic growth using augmented solow model. Dec 14, 2019 the findings of this study show that economic growth is one of the most important factors influencing the health expenditures both in the long and shortrun in all the 28 eu countries.
Health care expenditure and economic growth in nigeria. This study adopted the todayamamoto causality framework to examine these relationships. National health expenditure projections 20182027 forecast summary. Health spending back on a growth path after the slowdown following the financial crisis figure 1. Health expenditure, health outcomes and economic growth in. Annual growth of health expenditure and gdp, in real terms, 200017 source. Health is one of the most important factors that determine the quality of human capital, a necessary factor for economic growth.
Investing in health for economic development report by the mexican commission on macroeconomics and health 3 the demographic nexus note for readers the mexican commission on macroeconomics and health was created on july 29th, 2002 by the initiative of the minister of health of mexico, julio frenk. The granger causality test indicates a strong unidirectional effect from gdp to health expenditure, although providing no support to the view that health expenditure promotes longterm economic growth. They used disaggregated analysis in an attempt to unravel the impact of government expenditure on economic growth. Measuring the impact of renewable energy, public health. Similarly, health expenditure, both in terms of percentage of gdp spent on health and per capita health expenditure, is much higher in the developed countries, as evident from table 1.
Health spending accounts for close to a tenth of total economic activity, having stabilised in recent years figure 2. Health also indirectly impacts economic growth since aspects such as child health affect the future income of people through the impact health has on education. Download the full material from chapter one to five with reference. Mohsen mehrara, faculty of economics, university of tehran, tehran, iran. The contribution of health expenditure on economic development emanates from the health led growth hypothesis 6. So, regarding health expenditure as an investment in human capital and accordinglythe engine of growth, an increase in health expenditure is expected to lead to higher income. Impact of ppublic expenditure on health and nigeria. In 20, per capita health spending in the united states increased by 1. Nonetheless, against the backdrop of fiscal consolidation, it will be important to be careful on which expenditures are contained so that the governments inclusive growth agenda is not jeopardized. The major objective of the study is to examine the effect of different component of government expenditure in economic growth in context to nepal. This study examines the relationship between health expenditure, education and economic growth in mena countries using panel data estimation. An updated analysis of the roles of cost per case and treated prevalence in health spending growth pdf charles roehrig and craig lake bureau of economic analysis working paper wp20178 a comparison of bureau of economic analysis and bureau of labor statistics diseaseprice indexes pdf charles roehrig bureau of economic analysis working.
To the best of our knowledge, this is the first study that presents a detailed empirical. Thus, future studies can examine this relationship more thoroughly. The relationship between health expenditures and economic. Pdf health expenditure, education and economic growth in. The impact of government expenditure on economic growth in. The kao panel cointegtaion is empolyed for empirical.
The regression results showed the existence of a longrun relationship between government expenditure and economic growth. Following a tenyear period largely influenced by the great recession and major health reform, national health spending growth during 201827 is expected to be driven primarily by longobserved demographic and economic factors fundamental to the health sector. Our results suggest that health expenditure in general does not grow faster than gdp after taking into consideration other factors. This report providesan overview of the evidence of the benefits of investing in health, including the mechanisms that link health, poverty alleviation. There has been a growing interest in examining the relationship between income and health expenditures. Methods and specifications existing studies have examined various aspects of the health expenditureeconomic growth nexus. Health expenditures, institutional quality and economic growth. National health expenditures are projected to grow at an average annual rate of 5.
Investments in health through programmatic and financial commitments by the public sector can help stimulate development. This implies that health care is not a luxury good in mena countries. Serap bedir faculty of economics and administrative sciences, erzurum technical university, turkey. Public health expenditure and economic growth in india. We use the system general method of moments gmm technique to estimate the results. Public health expenditure phe is an indicator of good health since it reflects the effort made by a government towards building human capital. Pdf healthcare expenditure and economic growth in developing. In particular, a percentage increase in health human capital proxied by per capita health expenditure increases growth by 0. In highincome countries, there is a twoway causality for both private and public health expenditures in the shortrun, while in the longrun there is a oneway. Research highlights the causality between an increase in health care expenditure and economic growth. We find reciprocal relationship between health expenditure and economic growth in the short run and oneway causality from economic growth to public health expenditure in the longrun.
Jan 12, 2018 economic growth is dependent variable whereas, total capital expenditure, total recurrent expenditure, agriculture, nonagriculture, industry, service and inflation are independent variables. The model the economic growth model used in this study is based on the neo classical solow production function but with little modification. In addition, over the long run, capital expenditure and spending on health care both have. Government expenditure and economic growth in nigeria. Better health therefore builds the strong foundation of economic growth. This paper reexamines healthgrowth relationship using an unbalanced panel of 17 advanced economies for the period 187020 and employs panel generalised method of moments estimator that takes care of endogeneity issues, which arise due to reverse causality. Although there are differences in the economic structure and health.
This is in contrast to the faster growth recorded in the 2000s when health expenditure grew on average by around 3. Pdf on feb 1, 2016, serap bedir and others published healthcare expenditure and economic growth in developing countries find, read. However, by 2012, economic growth and tax revenue collected again slowed and the national deficit had risen to a troubling extent 5% of gdp on the main budget contributing to growth in health budgets slowing considerably from 2012 to 201920. The aim of this paper is to delineate the causal in. Health spending at a time of low economic growth and. This paper examined the feedback relationship between public healthcare expenditure and economic growth in nigeria for the period 1970 20. The discussion begins with a survey of existing theories and empirical evidence on the determinants of economic growth. In addition, subgroup analyses indicate that population aging and low fertility aggravate the negative impact of health expenditures on economic. Is income relevant for health expenditure and economic. Turkish case rengin ak yuzuncu yil university, faculty of economic and administrative sciences, department of economics. For instance, we note that very few studies examine the impact of government health expenditure as share of gdp on economic growth.
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