The Impact of Government Health Expenditure on Economic Growth

Abstract

At present, China is in an important strategic opportunity to promote the construction of Healthy China, and it is of great practical significance to study the economic growth effect of China's government health expenditure in this context. Based on the Cobb-Douglas production function, this paper explores the impact of government health expenditure on economic growth by using a two-way fixed effects model with panel data from 30 provincial regions in China between 2011 to 2020. The full-sample estimation results show that government health expenditure has a significant positive effect on economic growth. Further analysis finds that the economic growth effect of government health expenditure can be realized by increasing residential consumption expenditure. Taking different approaches to regional division, it is found that the effect of government health expenditure on economic growth is differentiated in different regions, specifically, the more obvious the driving effect is as the level of economic development increases. With the emergence of new problems and challenges that restrict the development of the health field, government departments should accelerate the improvement of China's public health care policy.