HEALTH CARE EXPENDITURE AND ECONOMIC GROWTH IN NIGERIA: AN EMPIRICAL APPRAISAL OF THE NEXUS

Abstract

A nation’s wealth is often described in terms of their physical stock of capital per time for the promotion of economic growth. One of such physical stock of capital is a healthy labour force. Therefore, this study investigated the relationship between health expenditure and economic growth in Nigeria from 1985 to 2019. To determine this, annual time series data was collected from various issues of the Central Bank of Nigeria (CBN) statistical bulletin and the World Development Indicator (WDI). Stationarity, long run relationship, equation estimation and causality were determined using the Augmented Dickey Fuller (ADF), Johansen-Cointegration, Parsimonious Error Correction Mechanism (ECM) and Pairwise Granger Causality test respectively. The result showed that a long run relationship exist among the variables while the ECM showed that in event of a disequilibrium, the system would restore itself to equilibrium at an adjustment speed of approximately 85.5percent. The result uncovered that current and past percentage of health expenditure in total expenditure (PHETE), government final consumption expenditure (GFCE), and labour force participation (LABF) all had direct impact on national growth (real GDP per capita) while current and past number of infant deaths (NUFD) had inverse relationship with national growth. Result further showed that there exists a unidirectional causality running from NUFD to RGDPPC; from GFCE to RGDPPC; from LABF to RGDPPC, from NUFD to PHETE, from LABF to PHETE, from NUFD to GFCE and from NUFD to LABF. It was recommended that the federal government through the Ministry of Health should endeavour to encourage private-public partnership in the building of quality health infrastructure such as hospitals with state of art facilities in localities where standard health care centres are not accessible to working citizens.