Causal Simultaneous Relation Between Economic Growth, Health Expenditure, and CO2 Emissions in MENA Countries

Abstract

Introduction: Economic growth is one of the most important goals of a country and has a close relationship with health expenditures and emissions of environmental pollutants. Health expenditures and environmental quality are also among the other important issues. On the one hand, environmental problems have become a serious threat to humankind in recent years. On the other hand, meaningful health expenditures can improve the health indicators, environmental quality, and economic growth. Methods: The objective of this study was to examine the causal relationship between economic growth, health expenditures, and CO2 emissions, using simultaneous-equations models and 3SLS for a panel of MENA countries in 1995-2014. Results: Findings showed that economic growth had a positive causality relationship with health expenditures and CO2 emissions. In addition, health expenditures had a negative effect on CO2 emissions. Conclusion: According to the positive effect of health expenditures on economic growth, healthcare sector credits should be increased. In fact, policy makers should invest on public health and welfare programs with regard to the future economic growth. In addition, since economic growth increases CO2 emissions, it is important for the investigated countries to examine the requirements to promote environmental protection and increase the technological transfer to reduce the environmental damage.