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Reassessing the impact of health expenditure on income growth in the face of the global sanitary crisis: the case of developing countries

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  • Brahim Gaies

    (IPAG Business School)

Abstract

In response to the COVID-19 pandemic, developing countries are increasing health spending to save lives. Such a response raises questions about the economic impact of this expenditure in terms of income growth that determines the development trajectory of these countries. This paper is the first to apply dynamic linear and threshold panel data models to capture the dynamic impact of health expenditure on growth on a large sample of developing countries, while addressing endogeneity bias and taking into account different levels of human and physical capital, as well as a set of health expenditure indicators. The main results show that while public and private domestic health expenditure increase income growth, external inflows of health expenditure do not. In addition, this positive impact is enhanced by a higher level of human and physical capital, thereby demonstrating complementarity rather than substitutability between investments in health, physical and human capital.

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  • Brahim Gaies, 2022. "Reassessing the impact of health expenditure on income growth in the face of the global sanitary crisis: the case of developing countries," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 23(9), pages 1415-1436, December.
  • Handle: RePEc:spr:eujhec:v:23:y:2022:i:9:d:10.1007_s10198-022-01433-1
    DOI: 10.1007/s10198-022-01433-1
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    2. Sinan Erdogan & Eyup Serdar Erdogan, 2025. "Is the health-led growth hypothesis valid in the Sub-saharan African countries? Fresh evidence from newly developed panel causality tests," Quality & Quantity: International Journal of Methodology, Springer, vol. 59(1), pages 497-521, February.
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    6. Maria Giuseppina Bruna & Béchir Ben Lahouel & Brahim Gaies, 2022. "Dans les brumes de l'endogénéité. Une étude critique des relations entre performance sociétale et performance économique," Post-Print hal-04070564, HAL.
    7. Shongkour Roy & Tanjina Khatun, 2022. "Effect of adolescent female fertility and healthcare spending on maternal and neonatal mortality in low resource setting of South Asia," Health Economics Review, Springer, vol. 12(1), pages 1-8, December.
    8. Wei Jiang & Yadong Wang, 2023. "Asymmetric Effects of Human Health Capital on Economic Growth in China: An Empirical Investigation Based on the NARDL Model," Sustainability, MDPI, vol. 15(6), pages 1-16, March.
    9. Brahim Gaies, 2023. "Banking sector openness, a path to social responsibility? Evidence from Southern European banks," Economics and Business Letters, Oviedo University Press, vol. 12(4), pages 284-295.
    10. 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.
    11. Khalid Mujahid Alharbi & Amina Elshamly & Ibrahim G. Mahgoub, 2025. "Do Regulatory Pressures and Stakeholder Expectations Drive CSR Adherence in the Chemical Industry?," Sustainability, MDPI, vol. 17(5), pages 1-22, March.
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    JEL classification:

    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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