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Health expenditure, human capital, and economic growth: an empirical study of developing countries

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  • Xiaoxuan Yang

    (University of Chicago)

Abstract

Social security systems were successively established in most developing countries in the 1980s and 1990s. To ensure the long-term sustainability of these newly established systems it is essential to carefully monitor the economic impact. Based on the panel data of 21 developing countries from 2000 to 2016, this paper is the first to apply the panel threshold model to empirically analyze the relationship between national health expenditures and economic growth under different levels of human capital. The results show that health expenditure and economic growth have significant interval effects because of the different levels of human capital. Specifically, when human capital levels are low, health expenditure is significantly negatively correlated with economic growth. When human capital is at a medium level, health expenditure has a positive but not significant impact on economic growth. When the level of human capital is high, the positive economic impact of the health expenditure is significantly enhanced. In addition, subgroup analyses indicate that population aging and low fertility aggravate the negative impact of health expenditures on economic growth. This study provides reliable analysis and can be used by developing countries to maintain a long-term sustainable social security system.

Suggested Citation

  • Xiaoxuan Yang, 2020. "Health expenditure, human capital, and economic growth: an empirical study of developing countries," International Journal of Health Economics and Management, Springer, vol. 20(2), pages 163-176, June.
  • Handle: RePEc:kap:ijhcfe:v:20:y:2020:i:2:d:10.1007_s10754-019-09275-w
    DOI: 10.1007/s10754-019-09275-w
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Chris Sampson’s journal round-up for 13th July 2020
      by Chris Sampson in The Academic Health Economists' Blog on 2020-07-13 11:00:06

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    6. Ayfer Ozyilmaz & Yuksel Bayraktar & Esme Isik & Metin Toprak & Mehmet Bilal Er & Furkan Besel & Serdar Aydin & Mehmet Firat Olgun & Sandra Collins, 2022. "The Relationship between Health Expenditures and Economic Growth in EU Countries: Empirical Evidence Using Panel Fourier Toda–Yamamoto Causality Test and Regression Models," IJERPH, MDPI, vol. 19(22), pages 1-17, November.
    7. Sanmarchi Francesco & Esposito Francesco & Golinelli Davide & Bucci Andrea & Toscano Fabrizio, 2021. "Association between Economic Growth, Mortality, and Healthcare Spending in 31 High-Income Countries," Forum for Health Economics & Policy, De Gruyter, vol. 24(2), pages 101-118, December.
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    More about this item

    Keywords

    Health expenditure; Human capital; Economic growth; Developing countries; Panel threshold model;
    All these keywords.

    JEL classification:

    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics

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