Impact of Health Expenditure on Economic Growth: A Comparative Study of Developed and Developing Countries

Abstract

This paper assesses the impact of health expenditure on economic growth for
countries at different income levels. A panel dataset over the period of 1995 to 2011 for 136
member countries is taken into consideration. These countries are segregated into four groups
according to their income. Based on the regression analysis, the study investigates the effect of
health spending on gross domestic product by applying panel least squares along with country
and year fixed effects. The study reveals that health expenditure per capita has a significant
positive effect on gross domestic product not only for high and upper middle income countries
but also for low and lower middle income countries. We see the impact of health expenditure for
first two groups (high income and upper middle income countries) are slightly higher than last
two groups (low income and lower middle income countries). Though the results illustrate the
usefulness of health care spending irrespective of the nature and level of income of the countries,
focusing only on health care spending may not be effective for economic development unless
integrated health service facilities are ensured to achieve the broader goals of poverty reduction,
human capital formation, and economic development.

Date of Award	2014
Original language	American English
Awarding Institution	Eastern Illinois University
Supervisor	Daniel C. Hickman (Supervisor)