The Impact of Health Expenditure on the Economic Growth in Sub-Saharan Africa

Badamassi Aboubacar,Deyi Xu

doi:10.4236/tel.2017.73046

Abstract

This paper examined the nexus between health care expenditure and economic growth in Sub-Saharan Africa over the period 1995-2014. We use the system General Method of Moments (GMM) technique to estimate the results. The findings reveal the existence of a positive and a statistically significant relationship between the two variables, precisely; health expenditure has a significant impact on the economic growth of the region. Regarding the control variables, while the effect of official development assistance on economic growth is insignificant, foreign direct investment, the active population and gross domestic savings appear as key determinants of economic growth in the region. Additionally, the results show that health care is a necessity rather than a luxury in Sub-Saharan Africa. It is therefore necessary to develop effective and efficient health care programs, increase health expenditure, make an effective use of the young population and create better environment for foreign direct investment in order to foster economic growth in Sub-Saharan Africa.

Highlights

Economic growth and health expenditure in the Sub-Saharan Africa vary substantially over time and across countries
This paper examined the nexus between health care expenditure and economic growth in Sub-Saharan Africa over the period 1995-2014
The paper has investigated the relationship between health expenditure and economic growth in Sub-Saharan Africa

Summary

Introduction

Economic growth and health expenditure in the Sub-Saharan Africa vary substantially over time and across countries. Adequate and efficient health related spending is widely considered as inevitable in the improvement of health status [1]. Investment in health workforce and infrastructure is expected to improve. Y. Xu 616 health conditions, better human capital of the population and more productivity (output). In sub-Saharan Africa (SSA) and other developing regions where resources are relatively scarce, health expenditure has received less attention in government budgets [2]. Africa’s 10% contribution to the world’s population relates to 3% of the world’s health spending [3]

Methods

Results

Conclusion