The Mechanism of Stabilizing Economic Growth of Public Prevention System

Abstract

The Outline of the “Healthy China 2030” Plan proposes to build a big healthy society by perfecting health service system and continuous improving residents’ physical health, and it advocates to promote health human capital to the same importance to education human capital. Based on the panel data of 271 prefecture level cities in China from 2007 to 2020, this paper constructs a fixed effect model to empirically analyze the mechanism of the public prevention system to reduce macroeconomic fluctuations and promote economic growth. The research shows that there are three channels for the public prevention system to stabilize economic growth: 1) Financial input for construction directly expands aggregate demand and promotes economic growth. 2) Improved overall public health facilitates the accumulation of human capital and promote intensive economic growth. 3) Stabilized social order and economic expectations reduces macroeconomic fluctuations and therefore drives economic development. The heterogeneity test shows that due to the regional differences in policy attention, education investment and environmental protection, the role of public prevention system in promoting economic growth in the central and northeast regions is significantly weaker than it is in the western and eastern regions.