Does health spending affect the economic growth of lower-middle-income economies? CS-ARDL approach

غالي, شرين

doi:10.21608/inp.2023.307099

	Does health spending affect the economic growth of lower-middle-income economies? CS-ARDL approach
المجلة المصرية للتنمية والتخطيط
Volume 31, Issue 2, June 2023, Page 106-131 PDF (1.6 MB)
Document Type: المقالة الأصلية
DOI: 10.21608/inp.2023.307099
View on SCiNiTO
Author
شرين غالي^*
مدرس بكلية الإدارة بأكاديمية السادات
Abstract
Spending on healthcare may lead to improved health outcomes, which can stimulate human capital growth, increase productivity, and boost the economy. Accordingly, this paper aims to assess whether health spending influences the growth of lower-middle-income countries between 2000 and 2019 in both short- and long-term. Since government and private health expenditures account for the vast majority of healthcare expenditures, the study employs two models to examine whether health expenditures affect economic growth. The first model examines private health spending’s influence on economic growth, whereas the second model analyzes general government health spending’s influence on economic growth. The study uses "cross-sectional autoregressive distributed lag (CS-ARDL)" method, along with extra diagnostic and specification tests. The findings of the two models for the overall sample reveal that health spending had no significant influence on GDP per capita due to the insignificant health spending in these countries. Moreover, the study divides the main data set into two groups based on the average current health expenditure as a percentage of GDP from 2000 to 2019. The first subgroup includes the countries with an average health expenditure lower than 5%, and the second subgroup includes the countries with an average equal to or greater than 5%, and the study conducts the CS-ARDL technique on both models for these subgroups. The findings reveal that all variables are insignificant in both models for the first subgroup. For the second subgroup, all variables are insignificant in both models except government health expenditure which is significant in the long term with economic growth, indicating that increasing health government spending may affect economic growth in the long term. Therefore, lower-middle-income countries have to prioritize public health spending and develop alternative funding sources, while also supporting growth-oriented policies and collaborating with private health sector.
Keywords
Health expenditure; Lower-middle-income; CS-ARDL; Economic growth; Private health spending; General government health spending


References
References Akingba, I. O. I., Kaliappan, S. R., & Hamzah, H. Z. (2018). Impact of health capital on economic growth in Singapore: an ARDL approach to cointegration. International Journal of Social Economics. ARORA, S. (2001). Health, Human Productivity, and Long-Term Economic Growth. The Journal of Economic History, 61(3), 699-749. Alhowaish, A. K. (2014). Healthcare spending and economic growth in Saudi Arabia: A Granger causality approach. International Journal of Scientific & Engineering Research, 5(1), 1471-1476. https://citeseerx.ist.psu.edu/document?repid=rep1&type=pdf&doi=f7d5c2c9e342842823757033d94e18534d69429b Anton, S. G., & Onofrei, M. (2012). Health care performance and health financing systems in countries from Central and Eastern Europe. Transylvanian Review of Administrative Sciences, 8(35), 22-32. https://rtsa.ro/tras/index.php/tras/article/view/24 Anyanwu, J. C., & Erhijakpor, A. E. (2009). Health expenditures and health outcomes in Africa. African Development Review, 21(2), 400-433. https://onlinelibrary.wiley.com/doi/full/10.1111/j.1467-8268.2009.00215.x Bakare, A. A., & Olubokun, S. (2011). Health care expenditure and economic growth in Nigeria: An empirical study. Journal of emerging trends in economics and management sciences, 2(2), 83-87. https://journals.co.za/doi/epdf/10.10520/EJC133895 Bein, M. (2020). The association between medical spending and health status: A study of selected African countries. Malawi Medical Journal, 32(1), 37-44. https://www.ajol.info/index.php/mmj/article/view/194912 Beraldo, S., Montolio, D., & Turati, G. (2009). Healthy, educated and wealthy: A primer on the impact of public and private welfare expenditures on economic growth. The Journal of Socio-Economics, 38(6), 946-956. https://www.sciencedirect.com/science/article/pii/S1053535709000791 Çetin, M., & Ecevit, E. (2010). Sağlik Harcamalarinin Ekonomik Büyüme Üzerindeki Etkisi: Oecd Ülkeleri Üzerine Bir Panel Regresyon Analizi. Doğuş Üniversitesi Dergisi, 11(2), 166-182. Chu, K. Y., Gupta, S., Clements, B., Hewitt, D., Lugaresi, S., Schiff, J., & Schwantz, G. (1995). Unproductive public expenditures. IMF Pamphlet Series, 48, 1-45. Chudik, A., Pesaran, M. H., & Tosetti, E. (2011). Weak and strong cross‐section dependence and estimation of large panels. https://academic.oup.com/ectj/article-abstract/14/1/C45/5060343 Chudik, A., & Pesaran, M. H. (2015). Common correlated effects estimation of heterogeneous dynamic panel data models with weakly exogenous regressors. Journal of Econometrics, 188(2), 393-420. Cylus, J., Permanand, G., Smith, P. C., & World Health Organization. (2018). Making the economic case for investing in health systems: what is the evidence that health systems advance economic and fiscal objectives? De Hoyos, R. E., & Sarafidis, V. (2006). Testing for cross-sectional dependence in panel-data models. The stata journal, 6(4), 482-496. https://journals.sagepub.com/doi/pdf/10.1177/1536867X0600600403 Demirbas, S. (1998). The growth of public expenditure in turkey, 1950-1990 (macro-models). University of Leicester (United Kingdom). Esmaeili, P., Rafei, M., Balsalobre-Lorente, D., & Adedoyin, F. F. (2022). The role of economic policy uncertainty and social welfare in the view of ecological footprint: evidence from the traditional and novel platform in panel ARDL approaches. Environmental Science and Pollution Research, 1-19. https://link.springer.com/article/10.1007/s11356-022-23044-2 Fendoğlu, E., & GÖKÇE, E. C. (2021). Türkiye’de eğitim ve sağlık harcamaları ile ekonomik büyüme arasındaki ilişki: Fourier yaklaşımı. Ekonomi İşletme ve Maliye Araştırmaları Dergisi, 3(2), 203-216. Gaies, B. (2022). Reassessing the impact of health expenditure on income growth in the face of the global sanitary crisis: the case of developing countries. The European Journal of Health Economics, 23(9), 1415-1436. Garcia-Escribano, M. M., Juarros, P., & Mogues, M. T. (2022). Patterns and Drivers of Health Spending Efficiency. International Monetary Fund. Halıcı-Tülüce, N. S., Doğan, İ., & Dumrul, C. (2016). Is income relevant for health expenditure and economic growth nexus?. International journal of health economics and management, 16, 23-49.https://doi.org/10.1007/s10754-015-9179-8 Heijink, R., Koolman, X., & Westert, G. P. (2013). Spending more money, saving more lives? The relationship between avoidable mortality and healthcare spending in 14 countries. The European Journal of Health Economics, 14(3), 527-538. https://link.springer.com/article/10.1007/s10198-012-0398-3 Henningsen, A., & Henningsen, G. (2019). Analysis of panel data using R. In Panel Data Econometrics (pp. 345-396). Academic Press. Henrekson, M. (1993). Wagner's law-a spurious relationship? Public finance, 46(3). Leiby, B. D., & Ahner, D. K. (2023). Multicollinearity applied stepwise stochastic imputation: a large dataset imputation through correlation-based regression. Journal of Big Data, 10(1), 1-20. Loayza, N. V., & Ranciere, R. (2006). Financial development, financial fragility, and growth. Journal of money, credit, and banking, 1051-1076. Mills, A. (2014). Health care systems in low-and middle-income countries. New England Journal of Medicine, 370(6), 552-557. Narayan, P. K., & Smyth, R. (2006). What determines migration flows from low‐income to high‐income countries? An empirical investigation of Fiji–Us migration 1972–2001. Contemporary economic policy, 24(2), 332-342. Newhouse, J. P. (1977). Medical care expenditure: a cross-national survey. The journal of human resources, 12(1), 115-125. Ozyilmaz, A., Bayraktar, Y., Isik, E., Toprak, M., Er, M. B., Besel, F., ... & Collins, S. (2022). The Relationship between Health Expenditures and Economic Growth in EU Countries: Empirical Evidence Using Panel Fourier Toda–Yamamoto Causality Test and Regression Models. International Journal of Environmental Research and Public Health, 19(22), 15091. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9690520/ Hopkins, S. (2010). Health expenditure comparisons: low, middle and high-income countries. The Open Health Services and Policy Journal, 3, 21-27. Nixon, J., & Ulmann, P. (2006). The relationship between health care expenditure and health outcomes. The European Journal of Health Economics, 7(1), 7-18. Oni, L. B. (2014). Analysis of the growth impact of health expenditure in Nigeria. IOSR Journal of Economics and Finance, 3(1), 77-84. iosrjournals.org/iosr-jef/papers/vol3-issue1/Version-1/I03117784.pdf Pesaran, M. H., & Smith, R. (1995). Estimating long-run relationships from dynamic heterogeneous panels. Journal of Econometrics, 68(1), 79-113. https://www.sciencedirect.com/science/article/pii/030440769401644F Pradhan, R. P. (2011). Effects of health spending on economic growth: A time series approach. The decision, 38(2), 68. Kleiman, E. (1974). The determinants of national outlay on health. In The economics of health and medical care (pp. 66-88). Palgrave Macmillan, London. Raghupathi, V., & Raghupathi, W. (2020). Healthcare expenditure and economic performance: Insights from the United States Data. Frontiers in public health, 8, 156. Tugcu, C. T. (2018). Panel data analysis in the energy-growth nexus (EGN). In The economics and econometrics of the energy-growth nexus (pp. 255-271). Academic Press. Voumik, L. C., & Sultana, T. (2022). Impact of urbanization, industrialization, electrification and renewable energy on the environment in BRICS: fresh evidence from novel CS-ARDL model. Heliyon, 8(11), e11457. https://doi.org/10.1016/j.heliyon.2022.e11457 WHO. (2019). Countries are spending more on health, but people are still paying too much out of their own pockets. World Health Organization. Retrieved January 14, 2023, from https://www.who.int/news/item/20-02-2019-countries-are-spending-more-on-health-but-people-are-still-paying-too-much-out-of-their-own-pockets World Bank database. https://datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups Yu, J., Ju, F., Wahab, M., Agyekum, E. B., Matasane, C., & Uhunamure, S. E. (2022). Estimating the Effects of Economic Complexity and Technological Innovations on CO2 Emissions: Policy Instruments for N-11 Countries. Sustainability, 14(24), 16856. Yones, R. F. A. R. M. (2023). Investigating Nexus among Transportation, Financial Inclusion and Economic Growth in MENA Region. المجلة العلمية للدراسات والبحوث المالية والتجارية, 4(2), 439-467.‎ Zeqiraj, V., Sohag, K., & Soytas, U. (2020). Stock market development and low-carbon economy: The role of innovation and renewable energy. Energy Economics, 91, 104908. https://doi.org/10.1016/j.eneco.2020.104908. Zuven, M. (2014). Impact of Health Expenditure on Economic Growth: A Comparative Study of Developed and Developing Countries, Eastern Illinois University.
Statistics Article View: 181 PDF Download: 254