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Government Spending on Healthcare and Economic Growth in Russia: A Regional Aspect

Author

Listed:
  • Olga Anatolyevna Demidova

    (National Research University Higher School of Economics)

  • Elena Vladimirovna Kayasheva

    (National Research University Higher School of Economics)

  • Artem Vladimirovich Demyanenko

    (National Research University Higher School of Economics)

Abstract

The aim of this paper was to investigate the influence of an increase in government healthcare expenditures on regional economic growth in Russia. Studies have shown that an increase in healthcare expenditures stimulate an increase in GDP through several channels. Firstly, it improves the quality of labor force, which can lead to an increase in labor productivity. Secondly, an increase in productivity and size of labor force lead to consumption expansion and then to firms’ income growth, so there is a multiplication effect. Including the assumption that the relationship between healthcare expenditure and economic growth may be non-linear we formed the hypothesis of the existence of the average optimal share of healthcare expenditure in GRP that maximizes average regional economic growth rate. In this research it was suggested that an increase in healthcare expenditures besides the direct effect on economic growth of a particular region also affects economic growth of neighboring regions. The possible explanation of this is the positive impact of healthcare services received in the neighboring regions on nearby territories, joint national healthcare projects, and distribution of scientific knowledge. Using the spatial Durbin model focusing on regional data of 2005–2017, it was shown that the average optimal share of healthcare expenditures equals to 5,9% of GRP with an inclusion of spatial effects and 7,6% without them, outlining the importance of including interconnection variables between Russian regions into the model. The regional statistics analysis showed the failure to reach the recommended share by most Russian regions, which can be viewed as a possibility for economic growth stimulation in case of the increase in governmental spending on healthcare in the future

Suggested Citation

  • Olga Anatolyevna Demidova & Elena Vladimirovna Kayasheva & Artem Vladimirovich Demyanenko, 2021. "Government Spending on Healthcare and Economic Growth in Russia: A Regional Aspect," Spatial Economics=Prostranstvennaya Ekonomika, Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia), issue 1, pages 97-122.
    • Handle: RePEc:far:spaeco:y:2021:i:1:p:97-122
    DOI: https://dx.doi.org/10.14530/se.2021.1.097-122
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    References listed on IDEAS

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    More about this item

    Keywords

    healthcare; government expenditures; government spending; economic growth; spatial effects; Russian regions;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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