Identifying the Causality Relationship between Health Expenditure and Economic Growth: An Application on E7 Countries

Yıl 2019, Cilt: 1 Sayı: 1, 5 - 23, 07.01.2019

Hasan Dinçer , Serhat Yuksel

Öz

This study aims to identify the causality relationship
between health expenditure and economic growth in emerging economies. Within
this framework, E7 countries are evaluated by using Pedroni panel cointegration
method and Dumitrescu Hurlin panel causality analysis. For this purpose, annual
data for the years between 1996 and 2016 is considered. As a result of Pedroni
panel cointegration test, it is defined that there is a long run relationship
between economic growth with total health expenditure and public health
expenditure, but this relationship is not valid between private health care
expenditure and economic growth. According to Dumitrescu Hurlin panel causality
analysis results, it is concluded that there is not a causality relationship
from the health expenditure to the economic growth. However, it is also
determined that economic growth is the main cause of total, public and private
health expenditure. Therefore, it is recommended that the role of private
sector in health should be improved so that the health expenditure can have a
positive contribution to the economic development of emerging countries.

Anahtar Kelimeler

Health Expenditure, E7 Countries, Economic Growth, Pedroni Panel Cointegration Analysis, Dumitrescu Hurlin Panel Causality Analysis

Kaynakça

• Aboubacar, B., & Xu, D. The Impact of Health Expenditure on the Economic Growth in Sub-Saharan Africa. Theoretical Economics Letters, 2017, 703, 615.
• Abubakar, A., Kassim, S. H., & Yusoff, M. B. Financial development, human capital accumulation and economic growth: empirical evidence from the economic community of West African States ECOWAS. Procedia-Social and Behavioral Sciences, 2015, 172, 96-103.
• Acemoglu, D., & Restrepo, P. Secular stagnation? The effect of aging on economic growth in the age of automation. American Economic Review, 2017, 1075, 174-79.
• Adalı, Z., & Yüksel, S. Causality relationship between foreign direct investments and economic improvement for developing economies. Marmara İktisat Dergisi, 2017, 12, 109-118.
• Ämiri, Ä., & Linden, M. Income and total expenditure on health in OECD countries: Evidence from panel data and Hsiao's version of Granger non-causality tests. Economics and Business Letters, 2016, 51, 1-9.
• Armanios, D. E., Eesley, C. E., Li, J., & Eisenhardt, K. M. How entrepreneurs leverage institutional intermediaries in emerging economies to acquire public resources. Strategic Management Journal, 2017, 387, 1373-1390.
• Atilgan, E., Kilic, D., & Ertugrul, H. M. The dynamic relationship between health expenditure and economic growth: is the health-led growth hypothesis valid for Turkey?. The European Journal of Health Economics, 2017, 185, 567-574.
• Aydın, M., & Malcıoğlu, G. Financial Development and Economic Growth Relationship: The Case of OECD Countries. Journal of Applied Research in Finance and Economics, 2016, 21, 1-7.
• Bakare, A. A., & Olubokun, S. Health care expenditure and economic growth in Nigeria: An empirical study. Journal of Emerging Trends in Economics and Management Sciences JETEMS, 2011, 22, 83-87.
• Balaji, B. Causal nexus between public health expenditure and economic growth in four southern Indian states. IUP Journal of Public Finance, 2011, 93, 7.
• Barro, R. J. Economic growth in a cross section of countries. The quarterly journal of economics, 1991, 1062, 407-443.
• Bukenya, J. Do fluctuations in health expenditure affect economic growth?. The Open Economics Journal, 2009, 2, 31-38.
• Carrin, G., & Politi, C. Exploring the health impact of economic growth, poverty reduction and public health expenditure, 1996.
• Chang, K., & Ying, Y. H. Economic growth, human capital investment, and health expenditure: a study of OECD countries. Hitotsubashi Journal of Economics, 2006, 1-16.
• Cylus, J., Mladovsky, P., & McKee, M. Is There a Statistical Relationship between Economic Crises and Changes in Government Health Expenditure Growth? An Analysis of Twenty‐Four European Countries. Health services research, 2012, 476, 2204-2224.
• De Mendonça, H. F., & Baca, A. C. Relevance of corruption on the effect of public health expenditure and taxation on economic growth. Applied Economics Letters, 2017, 1-6.
• Dinçer, H., Yüksel, S., & Adalı, Z. Identifying Causality Relationship between Energy Consumption and Economic Growth in Developed Countries. International Business and Accounting Research Journal, 2017, 12, 71-81.
• Dumitrescu, E. I.,&Hurlin, C. Testing for Granger non-causality in heterogeneous panels. Economic Modelling, 2012, 294, 1450-1460.Emadzadeh, M., Sameti, M., & Safi Dastjerdi, D. The Relationship between Health Expenditure and Economic Growth. Journal of Health Information Management, 2011, 87, 918-28.
• Erçelik, G. The Relationship between Health Expenditure and Economic Growth in Turkey from 1980 to 2015. Journal of Politics, 2018, 11. Ghanbari, A., & Basakha, M. Investigating the effects of public health care expenditure on Iranian economic growth 1338-1383, 2008.Grigoli, F., & Kapsoli, J. Waste not, want not: the efficiency of health expenditure in emerging and developing economies. Review of Development Economics, 2018, 221, 384-403.
• Haldar, S. Effect of Health Human Capital Expenditure on Economic Growth in India: A State Level Study. Asia-Pacific Social Science Review, 2008, 82.
• Halıcı-Tülüce, N. S., Doğan, İ., & Dumrul, C. Is income relevant for health expenditure and economic growth nexus?. International journal of health economics and management, 2016, 161, 23-49.
• Hasanov, F., Bulut, C., & Suleymanov, E. Review of energy-growth nexus: A panel analysis for ten Eurasian oil exporting countries. Renewable and Sustainable Energy Reviews, 2017, 73, 369-386.
• Jakovljevic, M., Potapchik, E., Popovich, L., Barik, D., & Getzen, T. E. Evolving health expenditure landscape of the BRICS nations and projections to 2025. Health economics, 2017, 267, 844-852.
• Kahia, M., Aïssa, M. S. B., & Lanouar, C. Renewable and non-renewable energy use-economic growth nexus: The case of MENA Net Oil Importing Countries. Renewable and Sustainable Energy Reviews, 2017, 71, 127-140.
• Karwowski, E., & Stockhammer, E. Financialisation in emerging economies: a systematic overview and comparison with Anglo-Saxon economies. Economic and Political Studies, 2017, 51, 60-86.
• Keehan, S. P., Cuckler, G. A., Sisko, A. M., Madison, A. J., Smith, S. D., Lizonitz, J. M., ... & Wolfe, C. J. National health expenditure projections: modest annual growth until coverage expands and economic growth accelerates. Health Affairs, 2012, 317, 1600-1612.
• Khan, H. N., Khan, M. A., Razli, R. B., Shehzada, G., Krebs, K. L., & Sarvghad, N. Health care expenditure and economic growth in SAARC countries 1995 2012: a panel causality analysis. Applied Research in Quality of Life, 2016, 113, 639-661.
• Khoshnevis Yazdi, S., & Khanalizadeh, B. Air pollution, economic growth and health care expenditure. Economic Research-Ekonomska Istraživanja, 2017, 301, 1181-1190.
• Latif, Z., Latif, S., Ximei, L., Pathan, Z. H., Salam, S., & Jianqiu, Z. The dynamics of ICT, foreign direct investment, globalization and economic growth: Panel estimation robust to heterogeneity and cross-sectional dependence. Telematics and Informatics, 2017.
• Leidl, R. European integration, economic growth, and health care expenditure. Health Care and its Financing in the Single European Market, Amsterdam, 1998, 38-58.
• Lisowsky, P., Minnis, M., & Sutherland, A. Economic growth and financial statement verification. Journal of Accounting Research, 2017, 554, 745-794.
• Luo, Y. Public Health Expenditure, Health Human Capital and Economic Growth. South China Journal of Economics, 2011, 4, 006.
• Mehmood, B., Raza, S. H., & Mureed, S. Health expenditure, literacy and economic growth: PMG evidence from Asian countries. Euro-Asian Journal of Economics and Finance, 2014, 24, 408-417.
• Mehrara, M., & Musai, M. The causality between health expenditure and economic growth in Iran. Int. J. Eco. Res, 2011, 24, 13-19.
• Mojtahed, A., & Javadipour, S. An investigation of the effects of health expenditure on economic growth case study of developing countries. Iranian Journal of Economic Research, 2004, 19, 31-54.
• Mukherjee, S. Anatomy and Significance of Public Healthcare Expenditure and Economic Growth Nexus in India: Its Implications for Public Health Infrastructure Thereof. In Social, Health, and Environmental Infrastructures for Economic Growth pp. 120-144. IGI Global, 2017.
• Naidu, S., & Chand, A. Does central government health expenditure and medical technology advancement determine economic growth rates in the Pacific island countries?. Asia-Pacific Journal of Business Administration, 2013, 53, 234-245.
• Nasiru, I., & Usman, H. M. Health expenditure and economic growth nexus: An ARDL approach for the case of Nigeria. JORIND, 2012, 103, 95-100.
• Odior, E. S. Government expenditure on health, economic growth and long waves in A CGE micro-simulation analysis: the case of Nigeria. European Journal of Economics Finance and Administrative Sciences, 2011, 3, 101-113.
• Odubunmi, A. S., Saka, J. O., & Oke, D. M. Testing the cointegrating relationship between health care expenditure and economic growth in Nigeria. International Journal of Economics and Finance, 2012, 411, 99.
• Ogundipe, M. A., & Lawal, N. A. Health expenditure and Nigerian economic growth. Eur J Econ, Finance Adm Sci, 2011, 30, 125-129.
• Öztürk, F., & Ada, A. A. Is Health Expenditure Important for Economic Growth in Selected EU Countries?. The Empirical Economics Letters, 2013, 127, 715-722.
• Paramati, S. R., Ummalla, M., & Apergis, N. The effect of foreign direct investment and stock market growth on clean energy use across a panel of emerging market economies. Energy Economics, 2016, 56, 29-41.
• Pedroni, P. Fully modified OLS for heterogeneous cointegrated panels and the case of purchasing power parity. Manuscript, Department of Economics, Indiana University, 1996.
• Pedroni, P. Fully modified OLS for heterogeneous cointegrated panels. In Nonstationary panels, panel cointegration, and dynamic panels pp. 93-130. Emerald Group Publishing Limited, 2001.
• Piabuo, S. M., & Tieguhong, J. C. Health expenditure and economic growth-a review of the literature and an analysis between the economic community for central African states CEMAC and selected African countries. Health economics review, 2017, 71, 23.
• Safdari, M., Mehrizi, M. A., & Elahi, M. The effect of health expenditure on economic growth in Iran. African Journal of Business Management, 2017, 738, 3972.
• Salahuddin, M., & Alam, K. Information and Communication Technology, electricity consumption and economic growth in OECD countries: A panel data analysis. International Journal of Electrical Power & Energy Systems, 76, 2016, 185-193
• Scheffler, R. M. Health expenditure and economic growth: An international perspective. Occasional papers on Globalization, 2004, 110, 1-9.
• Stubbs, T., Kentikelenis, A., Stuckler, D., McKee, M., & King, L. The impact of IMF conditionality on government health expenditure: A cross-national analysis of 16 West African nations. Social Science & Medicine, 2017, 174, 220-227.
• Tunalı, Ç. B. An Empirical Analysis on the Relationship between Health Care Expenditures and Economic Growth in the European Union Countries. European Journal of Medicine and Natural Sciences, 2018, 21, 12-17.
• Wang, K. M. Health care expenditure and economic growth: Quantile panel-type analysis. Economic Modelling, 2011, 284, 1536-1549.
• Wang, K. M., Lee, Y. M., Lin, C. L., & Tsai, Y. C. The effects of health shocks on life insurance consumption, economic growth, and health expenditure: A dynamic time and space analysis. Sustainable Cities and Society, 2018, 37, 34-56.
• Wang, K. M., & Lee, Y. M. The impacts of life insurance asymmetrically on health expenditure and economic growth: dynamic panel threshold approach. Economic Research-Ekonomska Istraživanja, 2018, 311, 440-460.
• Yip, W., Lee, Y. C., Tsai, S., & Chen, B. Managing health expenditure inflation under a single-payer system: Taiwan's National Health Insurance. Social Science & Medicine, 2017.