Abstract

Background: Labour force, which is one of the main factors of production function with capital input in traditional economic growth theory, has got an important effect on a country’s economic growth. So a productive labour force is crucial for an economy. An increase in health expenditure improves good health care to the citizens. Since people who were provided by good health care feel themselves more productive, the increasing productivity in labour force and working hours cause an economic growth hence enhancement in income (Gross Domestic Product, GDP) and income per capita (IPC) in a country incessantly. Also higher IPC means better access to the health services which were supplied by public and private sectors in a country. This study aims to investigate the relationship between the share of health expenditure in GDP (HEXP) and IPC data and vice versa for 37 High Income Countries (HIC).

Methods: Cross-section data (CSD) analysis and panel data (PD) analysis consisting of random and fixed effects estimations were used in the study to investigate the relationship between HEXP and IPC for selected country group.

Results: According to the random effects model (RAM) and fixed effects model (FEM) with PD analysis and CSD analysis in the study, HEXP is found as one of the determinants of IPC and IPC as a main determinant of HEXP in 37 HIC. Granger causality test is also applied to test the direction of causality between HEXP and IPC for HIC and Turkey. It is obviously seen that IPC Granger causes HEXP increase whereas we can’t reject HEXP doesn’t cause IPC hypothesis according to Granger test statistics for PD. There is also no proven correlation between two variables for CSD analysis.

Conclusion: In the study after the analysis of 37 HIC together it is found that IPC promotes HEXP not at once but in a time period. In the manuscript our results show that economic growth Granger causes HEXP increase and HEXP does not Granger cause IPC for PD. For CSD there is no relationship between HEXP and IPC. The case of IPC not increasing to a high income level from middle income stuck on a threshold is called in literature as "Middle Income Trap (MIT)". So guiding how HIC jumped from middle class to high income class is important for the emerging countries (EC) to avoid the "MIT". EC should increase HEXP to improve labour force productivity, which will cause a rapid economic growth as developed countries have done in past.

Keywords: High Income Countries (HIC); Cross-section Data (CSD); Economic Growth

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Citation

Citation: Özlem Özsoy and Metin Gürler. “The Analysis of Health Expenditure as a Determinant of Economic Growth in 37 High Income Countries". Acta Scientific Nutritional Health 4.9 (2020): 19-33.

Copyright

Copyright: © 2020 Özlem Özsoy and Metin Gürler. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.