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The Role of Government Health Expenditure in Driving Economic Growth: Evidence from OECD Countries

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  • Nur Kamilah Husna Abas
  • Nur Amirah Borhan
  • Ruhaini Muda
  • Yuslina Zakaria

Abstract

This study examines the influence of government health expenditure and life expectancy on economic growth. The study makes use of panel data analysis and utilizes data from the OECD nations between 2000 and 2021. The study applies panel data analysis using POLS, FEM and REM models and dynamic GMM models. The study also gauges the moderating role of life expectancy on the relationship between government health expenditure and economic growth. The results indicate that government expenditure on health hurts economic growth. A detrimental relationship between life expectancy and economic growth indicates that higher life expectancy could result in elevated healthcare and financial expenses. Nevertheless, the interactive regression model suggests that there is no significant moderation of the association between government expenditure on health and economic growth by life expectancy, implying that the influence of government health expenditure on economic growth is generally unaffected by demographic changes. These findings emphasize the significance of differentiating between the short-term and long-term economic consequences of healthcare expenditure. This study offers insights into the optimization of public spending in OECD nations to promote sustainable economic growth and enhance public health outcomes.

Suggested Citation

  • Nur Kamilah Husna Abas & Nur Amirah Borhan & Ruhaini Muda & Yuslina Zakaria, 2024. "The Role of Government Health Expenditure in Driving Economic Growth: Evidence from OECD Countries," Information Management and Business Review, AMH International, vol. 16(3), pages 736-749.
    • Handle: RePEc:rnd:arimbr:v:16:y:2024:i:3:p:736-749
    DOI: 10.22610/imbr.v16i3S(I)a.4236
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    References listed on IDEAS

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    2. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
    3. John C. Driscoll & Aart C. Kraay, 1998. "Consistent Covariance Matrix Estimation With Spatially Dependent Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 549-560, November.
    4. Abdalla Sirag & Norashidah Mohamed Nor & Siong Hook Law, 2020. "Does Higher Longevity Harm Economic Growth?," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 67(1), pages 51-68.
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