Real GDP growth rates and healthcare spending \u2013 comparison between the G7 and the EM7 countries

Mihajlo Jakovljevic,Yuriy Timofeyev,João Paulo Teixeira,Chhabi Lal Ranabhat,Nemanja Rancic,Vladimir Reshetnikov,Paula Odete Fernandes

doi:10.1186/s12992-020-00590-3

Abstract

BackgroundAccelerated globalisation has substantially contributed to the rise of emerging markets worldwide. The G7 and Emerging Markets Seven (EM7) behaved in significantly different macroeconomic ways before, during, and after the 2008 Global Crisis. Average real GDP growth rates remained substantially higher among the EM7, while unemployment rates changed their patterns after the crisis. Since 2017, however, approximately one half of the worldwide economic growth is attributable to the EM7, and only a quarter to the G7. This paper aims to analyse the association between the health spending and real GDP growth in the G7 and the EM7 countries.ResultsIn terms of GDP growth, the EM7 exhibited a higher degree of resilience during the 2008 crisis, compared to the G7. Unemployment in the G7 nations was rising significantly, compared to pre-recession levels, but, in the EM7, it remained traditionally high. In the G7, the austerity (measured as a percentage of GDP) significantly decreased the public health expenditure, even more so than in the EM7. Out-of-pocket health expenditure grew at a far more concerning pace in the EM7 compared to the G7 during the crisis, exposing the vulnerability of households living close to the poverty line. Regression analysis demonstrated that, in the G7, real GDP growth had a positive impact on out-of-pocket expenditure, measured as a percentage of current health expenditure, expressed as a percentage of GDP (CHE). In the EM7, it negatively affected CHE, CHE per capita, and out-of-pocket expenditure per capita.ConclusionThe EM7 countries demonstrated stronger endurance, withstanding the consequences of the crisis as compared to the G7 economies. Evidence of this was most visible in real growth and unemployment rates, before, during and after the crisis. It influenced health spending patterns in both groups, although they tended to diverge instead of converge in several important areas.

Highlights

Accelerated globalisation, taking place primarily after the end of the Cold War Era, has substantially contributed to creating conditions for the occurrence of rapidly developing large economies worldwide, labelled “emerging markets” [1]
Average real Gross Domestic Product (GDP) growth rates remained substantially higher among the EM7, while unemployment rates changed the pre-crisis pattern into a novel postcrisis one
The purpose of this paper is to analyse the association between the health spending and real GDP growth in the G7 and the EM7 countries

Summary

Introduction

Accelerated globalisation, taking place primarily after the end of the Cold War Era, has substantially contributed to creating conditions for the occurrence of rapidly developing large economies worldwide, labelled “emerging markets” [1]. World economy growth was generally quite stable from the beginning of the XXI century until the occurrence of the Global Financial Crisis triggered by the Lehman Brothers’ bankruptcy in the USA in autumn 2007. It had disastrous consequences both in the mature, high-income free market economies and in the rapidly growing major emerging economies. The authors of this paper decided to elaborate further on the World Bank’s adopted comparison of real GDP growth rates and healthcare spending between the first group presented by the G7 nations and the second one marked as Emerging Markets Seven (EM7). This paper aims to analyse the association between the health spending and real GDP growth in the G7 and the EM7 countries

Objectives

Results

Discussion

Conclusion