Health Spending and Growth in South Asia

Abstract

This research paper aims to analyse the complexity of the correlation between public health expenditure and economic growth indicators in the seven SAARC member countries, which covers the time series data of the periods between 1993 and 2022. It establishes strong evidence that public health expenditure plays a crucial role in development, dependent on the principal indicator, the coefficient of healthcare investment, and the per capita GDP. The study also uses a broad contingent of economic models, including unit root tests, ARDL models, and error correction mechanisms, to examine the long and short-run relationship between health expenditure and economic growth. Analysis shows that public health expenditure is equally significant in mediating economic performance, so it is also a hindrance to socio-economic mobility and access to health care. The paper stresses the importance of meeting clients’ needs for special policy interventions to effectively drive the usage of scarce health dollars to improvements in health status and, thus, economic development in the region. Finally, this present study contributes to the literature on the relationship between health and economic growth, underlining the need for a positive interaction between health and economic policies in the SA region.