Abstract
This paper empirically investigates the relationship between health expenditures, health outcomes and economic growth in Africa using data from 48 African countries over the period 2000-2015 in a panel data regression framework. In line with wider literature on economic growth as well as health economics, the paper first finds that maternal, infant and child mortality rates are all negatively and significantly associated with economic growth in Africa. In addition, life expectancy at birth is positively associated with economic growth. A 9.4-year increase in life expectancy leads to 1 per cent increase in real GDP per capita. Second, the paper finds that health expenditures have direct and indirect effects on economic growth that are positive and economically meaningful. In particular, a 10 per cent increase in health expenditures leads to an increase in annual average real GDP per capita by 0.24 per cent. Third, education emerges as a strong determinant of both economic growth and health outcomes in Africa, particularly when female education is considered. The main policy implication of this paper is that governments should aim at spending more and efficiently on the overall health system to progress over health outcomes and benefit from the positive externalities leading to economic growth. In addition, it is crucial that governments partner with private sector for resource mobilization and effective service delivery.
Highlights
This paper empirically investigates the relationship between health expenditures, health outcomes and economic growth in Africa using data from 48 African countries over the period 2000-2015 in a panel data regression framework
The paper starts with an investigation of the direct effect of health expenditures on economic growth controlling for standard growth determinants
Given sample characteristics of health expenditures per capita a 1 per cent increase is negligible as the median increase in health expenditures over 16-year period is over 160 per cent
Summary
This paper empirically investigates the relationship between health expenditures, health outcomes and economic growth in Africa using data from 48 African countries over the period 2000-2015 in a panel data regression framework. We hypothesize that improved health outcomes (reduced maternal, infant and child mortality rates and increased life expectancy) positively and significantly affect economic growth in Africa. This paper contributes to the health economics literature in that it provides estimates of the quantitative effects of health expenditure and health outcomes on GDP growth based on the most recent data from Africa while accounting for individual unobserved heterogeneity. The paper is unique in two respects It is one of the very few studies on the relationship between healthcare and economic growth using panel data, which include countries in all the subregions of Africa. The paper differs from others by conducting a more comprehensive analysis of the direct and indirect impacts of health expenditure on economic growth in Africa based on the most recent data
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