Health Expenditure & Economic Growth

As is known to all, a healthy society and active workforce are the key factors of sustainable productivity and economic growth. And in nowadays’ world, people are still the main workforce in all kinds of industries. So the health of people is always the focus of different countries and areas. And with the development of society, more and more governments, organizations and individuals have paid more attention to health problems. So the annual health expenditure of each country also attracts a lot of attention. 

Health expenditure, an important part of the financial budget and expenditure of each country and area, mainly includes two parts: private health expenditure and public health expenditure. The private health expenditure usually consists of direct household (out-of-pocket) spending, private insurance, charitable donations, and direct service payments by private corporations; while public health expenditure contains recurrent and capital spending from government (central and local) budgets, external borrowings and grants (including donations from international agencies and nongovernmental organizations), and social (or compulsory) health insurance funds.

And according to some surveys, it can be found that the health expenditure has been increased year after year in many countries. Then what’s the effect of this change? Does it have an influence on the economic growth of their countries?

Actually, the developing countries and areas where resources are very scarce paid less attention to the study of health expenditure, so studies from these areas would be of great importance. Recently, an example is provided to confirm the relationship between these two variables. The researchers used the system General Method of Moments (GMM) technique to analyze the relationship base on the related data of Sub-Saharan Africa over the period 1995-2014. And the final result shows that there is a positive significant relationship between health expenditure and economic growth.

In summary, the increase of health expenditure and the implementation of more health care problems would improve the health of people and living environment, make effective use of workforce, and attract more foreign investment, which are beneficial for the growth of economy.

Article by Badamassi Aboubacar and Deyi Xu, from China University of Geosciences, Wuhan, China.

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