On the Relationship between Health Capital and Economic Growth in Russian Regions (2013–2018)

Abstract

Over the last few years in the Russian economy and politics, it was generally agreed that the population’s health is one of the drivers of the economic growth. While little research has been done on the relationship between health capital, health care costs and economic growth, there is no generally accepted model in economic theory supported by empirical tests for individual countries and regions that would explain the relationship between these variables. This study aims to address this gap and quantifying the impact of health capital and health care costs on the regional economic growth in 2013–2018 within the economic growth model with endogenous technological progress. The authors constructed two specifications of the Arellano-Bond model for the dependent variable GRP per capita growth rate. The simulation results have made it possible to conclude that the accumulation of health capital leads to increased economic growth in the Russian regions. Simultaneously, an increase in government spending on health care at a fixed level of health capital did not result in an increase in GRP per capita growth rate in 2013–2018, which a number of factors can explain, i.e. general focus of public health expenditure on maintaining a favorable epidemiological situation and infrastructure of industries not directly related to individual health as well as possible insufficient level of human capital accumulation in the regions. Further research will focus on assessing the impact of health capital and health care costs in an extended model to include the level of human capital.