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Why Do Some Countries Spend More for Health? An Assessment of Sociopolitical Determinants and International Aid for Government Health Expenditures

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  • Li-Lin Liang
  • Andrew J Mirelman

Abstract

A consensus exists that rising income levels and technological development are among the key drivers of total health spending. However, determinants of public sector health expenditure are less well understood. This study examines a complex relationship across government health expenditure (GHE), sociopolitical risks, and international aid, while taking into account the impact of national income and fiscal capacity on health spending. The author apply a two-way fixed effects and two-stage least squares regression method to a panel dataset comprising 120 countries for the years 1995 through 2010. Our results show that democratic accountability has a diminishing positive correlation with GHE, and that levels of spending are higher when the government is more stable. Corruption is associated with less spending in developing countries, but with more spending in high-income countries. Furthermore, the author find that development assistance for health (DAH) substitutes for domestically financed government health expenditure (DGHE). For an average country, a 1 percent increase in total DAH or DAH to government is associated with a 0.02 percent decrease in DGHE. Our work highlights that policy reforms that aim to eliminate corruption are fundamental to improving the capacity of developing countries to scale up GHE, and to increasing the efficiency of health care systems in developed countries in containing health care costs. To minimize fungibility, donors may impose stronger monitoring mechanisms for corruption. Delivering aid through NGOs may be an option in countries with high ethnic tensions; however, the ability to do so depends on institutional arrangements and the capacity of NGOs in individual countries.

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  • Li-Lin Liang & Andrew J Mirelman, 2014. "Why Do Some Countries Spend More for Health? An Assessment of Sociopolitical Determinants and International Aid for Government Health Expenditures," Health, Nutrition and Population (HNP) Discussion Paper Series 88182, The World Bank.
  • Handle: RePEc:wbk:hnpdps:88182
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    8. Clemente, Jesús & Lazaro, Angelina & Montanes, Antonio, 2016. "Public health expenditure in Spain: is there partisan behaviour?," MPRA Paper 69781, University Library of Munich, Germany.
    9. Abdalla Sirag & Norashidah Mohamed Nor & Nik Mustapha Raja Abdullah, 2017. "Health Financing: Does Governance Quality Matter?," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 21(3), pages 693-723, Summer.
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    11. Jamiil Jeetoo, 2020. "Spillover effects in public healthcare expenditure in Sub‐Saharan Africa: A spatial panel analysis," African Development Review, African Development Bank, vol. 32(2), pages 257-268, June.
    12. Vyas, Vishal & Mehta, Kiran & Sharma, Renuka, 2023. "The nexus between toxic-air pollution, health expenditure, and economic growth: An empirical study using ARDL," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 154-166.
    13. Han, Lu & Koenig-Archibugi, Mathias & Opsahl, Tore, 2018. "The social network of international health aid," Social Science & Medicine, Elsevier, vol. 206(C), pages 67-74.
    14. Behera, Deepak Kumar & Dash, Umakant, 2019. "Prioritization of government expenditure on health in India: A fiscal space perspective," Socio-Economic Planning Sciences, Elsevier, vol. 68(C).
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    16. Barlow, Pepita, 2020. "Global disparities in health-systems financing: A cross-national analysis of the impact of tariff reductions and state capacity on public health expenditure in 65 low- and middle-income countries, 199," LSE Research Online Documents on Economics 104107, London School of Economics and Political Science, LSE Library.
    17. Yemin Ding & Lee Chin & Fangyan Li & Peidong Deng, 2022. "How Does Government Efficiency Affect Health Outcomes? The Empirical Evidence from 156 Countries," IJERPH, MDPI, vol. 19(15), pages 1-18, August.
    18. Khemais Zaghdoudi, 2018. "Is the relationship between external debt and human development non-linear? A PSTR approach for developing countries," Economics Bulletin, AccessEcon, vol. 38(4), pages 2194-2216.
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    Keywords

    accountability; aggregate health expenditure; aggregate income; anticorruption; anticorruption reforms; bribes; cabinet; coalition government; corrupt; Corruption; corruption ... See More + in government; debt; delivery system; democracies; democracy; democratic accountability; democratic systems; determinants of health; Econometric Analysis of Health Care Expenditure; Economic Review; election; External Debt; financial resources; Fiscal Policy; fraud; Health Affairs; health care; health care costs; Health Care Expenditure; Health Care Finance; Health Care Reform; Health Care Spending; health care systems; health coverage; Health Economics; health expenditure; health expenditure growth; Health Expenditures; health financing; health insurance; health insurance coverage; Health Organization; Health Outcomes; Health Policy; health programs; health resources; health sector; Health Services; health spending; health systems; hospital systems; Human Development; Human Resources; incentive structures; income countries; Income Elasticity; Income Elasticity of Health Care; income groups; informal sector; insurance premiums; International Health Care; investigation; kickbacks; leadership; low-income countries; medical resources; medical technology; monitoring mechanisms; National Health; nepotism; Nutrition; older people; patronage; pocket payment; political interests; political opponents; political party; political system; political systems; Politicians; Private Health Services; private sector; Provision of Health Care; Public Health; Public Health Care; Public Health Spending; Public Policy; public sector; public spending; social health insurance; social welfare; transparency; Tuberculosis;
    All these keywords.

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