The concept of human capital became increasingly more critical among the economic growth models with the development of endogenous growth theories. Although the basic premise of human capital in education, health levels are also among the determinants that nurture and contribute to the development of human capital. Significantly, the existence of a socioeconomically developed social structure is possible with healthy individuals. In this regard, the provision of health services to meet the needs of society is related to the level of resources allocated to health services. It is expected that resources allocated sufficiently to health services will contribute positively to the increase in productivity in business life and thus to economic growth.
When the literature on the current panel studies that discuss the relationship between healthcare expenditures and economic growth is reviewed, it is observed that study periods, variables and methods that are used differ from one study to another. For example, in their study, Dreger and Reimers (2005) found a long-run relation between healthcare expenditures and economic growth for the 21 OECD countries from 1975 to 2001. Mehrara et al. (2012) found a negative relation between healthcare expenditures and economic growth for the 13 MENA countries for the period of 1995-2005. Badri and Badri (2016) study indicates a positive effect of healthcare expenditures on economic growth for the 24 OECD countries for the period of 2006-2013. Agir and Tiras (2018) found a two-way causality between healthcare expenditures and economic growth for a list of 173 countries for the period of 1995-2014. As seen in the examples, the current panel studies that discuss the relationship between healthcare expenditures and economic growth do not yield a conclusion that is valid universally. This study contributes to the literature by employing new panel data analysis techniques even though many studies discuss the relationship between healthcare expenditures and economic growth.
2. DESIGN AND METHOD
This study investigates the effect of healthcare expenditures on economic growth for the selected 7 OECD countries (Australia, Canada, Finland, Germany, Turkey, UK and USA), considering the availability of data. In this study, the empirical relation between healthcare expenditures and economic growth was analyzed by the current techniques in the panel data literature in light of the data obtained from the World Bank and OECD. Gauss 19 and Stata 14.2 econometric package programs were used for forecasts.
In the economic growth and healthcare expenditure model, the homogeneity of the coefficient of the independent variable is tested by slope homogeneity test, developed by Pesaran and Yamagata (2008). To determine the cross-section dependency in the model, Breusch and Pagan (1980) Lagrange Multiplier Test, CD and CDLM tests (Pesaran (2004)), and LMadj test, developed by Pesaran et al. (2008) were used. After these analyses, PANICCA test which is one of the 2nd generation panel unit root tests that was developed by Reese &Westerlund (2016), based on standard factor modelling, and considers cross-section dependency was implemented. The LM test that was developed by Westerlund and Edgerton (2007) was used to investigate whether there is a long-run relationship between health and economic growth. Augmented Mean Group Estimator that was developed by Eberhardt and Teal (2010) was used to analyze long-run coefficients.
3. FINDINGS AND DISCUSSION
The findings in this study support the internal growth models and show that a 1% increase in healthcare expenditures causes a 0.3% increase in economic growth. According to the results based on each country, the expenditures on health services in Australia, Canada, Turkey, UK and USA increases economic growth. These results support the studies on this topic in the literature.
4. CONCLUSION, RECOMMENDATION AND LIMITATIONS
In the light of the results, it should be emphasized that the effect of healthcare expenditures on economic growth, for sustainable growth performance, does not only depend on financial resources allocated to healthcare services but also healthcare policies that are chosen. In this regard, the strength of the causality relation between healthcare expenditures and economic growth varies according to health systems, healthcare infrastructures and social structures of countries. To be able to increase the effect of healthcare expenditures on growth, healthcare policies must be improved. Also, the policies that support justice should be adapted in the use of healthcare services; all segments of society should be able to benefit from healthcare services by making quality healthcare services available even to the poor.
- Ağır, H. ve Tıraş, H., (2018). “OECD Ülkelerinde Sağlık Harcamaları ve Ekonomik Büyüme İlişkisi: Panel Nedensellik Analizleri” , Siyaset, Ekonomi ve Yönetim Araştırmaları Dergisi, 6 (4): 13-29.
- Ağır, H., ve Türkmen, S., (2020). “Ekonomik Büyümeye Etkisi Bakımından Doğal Kaynaklar: Dinamik Panel Veri Analizi”, Gaziantep Üniversitesi, Araştırma Makalesi, 19 (3): 1-11.
- Ay, A. Yardımcı, P., (2006). “Türkiye’de Fiziksel ve Beşerî Sermaye Birikimi İle Ekonomik Büyüme Arasındaki İlişkilerin Var Modeli ile Analizi (1950-2000)”, Bilgi, Ekonomi ve Yönetim Kongresi, 155: 491-502.
- Badri, A. K. ve Badri, S. K., (2016), “Health Spending and Economic Growth in Selected OECD Countries”, American Journal of Clinical Neurology and Neurosurgery, 2 (1): 5-9.
- Baltagi, B.H. (2008), Econometric Analysis of Panel Data, Fourth Edition, West Sussex: John Wiley & Sons.
- Barro, R. J., (1990). “Government Spending in a Simple Model Of Endogenous Growth”, Journal of Political Economy, 98 (5): 103-125.
- Breusch T.S. and Pagan, A.R.. (1980), “A Lagrange multiplier test and its applications to model specification in econometrics”, Review of Economic Studies, 47 (1): 239-253.
- Cebeci, E. Ahmet, A., (2016), “The Effects Of Health Expenditures On Economic Growth: A Panel Regression Analysis on BRICS Countries and Turkey”, Dumlupınar Üniversitesi Sosyal Bilimler Dergisi, Özel Sayı, ss. 91-102.
- Dreger, C., ve Reimers, H. E., (2005). “Health Care Expenditures in OECD Countries: A Panel Unit Root and Cointegration Analysis”, Iza Discussion Paper, No. 1469.
- Eberhardt, M. ve Teal, F., (2010), “Aggregation versus Heterogeneity in Cross-Country Growth Empirics”, Centre for the Study of African Economies, Department of Economics, No: 17692, 1-37.
- Erdil, E. ve Yetkiner, I. H. (2004). “A Panel Data Approach For İncome- Health Causality”, The Economics of Health Reforms, (Ed. J.N. Yfantopoulus), 38, 701-724. https://www2.uni-hamburg. de/Wiss/FB/15/Sustainability/yetkiner/ papers/FNU47.pdf Erişim T: 04. 04. 2020.
- Fazaeli, A. A., Ghaderi, H., Salehi, M., ve Fazaeli, A. R., (2016), “Health Care Expenditure and GDP in Oil Exporting Countries: Evidence from OPEC Data, 1995-2012”, Global Journal of Health Science, 8 (2): 93-98.
- Göv, A., Orhan, E, B., ve Köstekçi, A., (2019), “Sağlık Harcamaları İle Ekonomik Büyüme ve İnsani Gelişme Endeksi İlişkisi: OECD Ülkeleri İçin Ekonometrik Bir Analiz”, Journal of Academic Value Studies, 5 (5): 781-790.
- Kar, M. Ağır, H. ve Türkmen, S., (2019), “Seçilmiş Gelişmekte Olan Ülkelerde Elektrik Tüketiminin Ekonomik Büyümeye Etkisinin Panel Ekonometrik Analizi”, Uluslararası Ekonomik Araştırmalar Dergisi, 5 (3): 38-48.
- Kibritçioğlu, A. (1998). İktisadi Büyümenin Belirleyicileri ve Yeni Büyüme Modellerinde Beşerî Sermayenin Yeri, Ankara Üniversitesi SBF Dergisi, 53 (1): 207-230.
- Koying, C. ve Young-Hsiang, Y. (2006). “Economic Growth, Human Capital İnvestment, and Health Expenditure: a Study of OECD Countries”, Hitotsubashi Journal Of Economics, 47 (1): 1-16.
- Lucas, E. R., (1988). “On The Mechanics of Economic Development”, Journal of Monetary Economics, 22 (1): 3-42.
- Mehrara, M., Fazaeli, A.A., Fazaeli, A.A. ve Fazaeli, A.R., (2012). “The Relationship between Health Expenditure and Economic Growth in Middle East & North Africa (MENA) Countries” , International Journal Business Managment Economic Research, 3 (1): 425-428.
- Narayan, S., Narayan, P. K. ve Mishra, S. (2010). “Investigating the Relationship Between Health and Economic Growth: Empirical Evidence From a Panel of 5 Asian Countries”, Journal of Asian Economics, 21: 401-411.
- Nazlıoğlu, Ş., (2010), “Makro İktisat Politikalarının Tarım Sektörü Üzerindeki Etkileri: Gelişmiş Ve Gelişmekte Olan Ülkeler Için Bir Karşılaştırma”. Yayınlanmamış Doktora Tezi, Erciyes Üniversitesi Sosyal Bilimler Enstitüsü, Kayseri.
- Özcan, B., (2015), “Çke Hipotezi Yükselen Piyasa Ekonomileri İçin Geçerli Mi? Panel Veri Analizi”, Doğuş Üniversitesi Dergisi, 16 (1): 1-14.
- Özcan, B., ve Arı, A. (2014), “Araştırma-Geliştirme Harcamaları ve Ekonomik Büyüme İlişkisi: Panel Veri Analizi”, Maliye Dergisi, 166 (1): 39-55.
- Pesaran, H., (2004), “General Diagnostic Tests for Cross Section Dependence in Panels”. Cambridge: University of Cambridge Working Paper.
- Pesaran, M. H., (2007), “A Simple Panel Unit Root Test in the Presence of Cross-Section Dependence”. Journal of Applied Econometrics, 22: 265–312.
- Pesaran, M. H., Ullah, A., ve Yamagata, T., (2008), “A Bias-adjusted LM Test of Error Cross-section Independence”. Econometrics Journal, 11: 105-127.
- Reese, S. and Westerlund, J. (2016), “Panicca: Panic on Cross-Section Averages”, Journal of Applied Econometrics, 31 (6): 961-981.
- Romer, P. M., (1986). “Increasing Returns and Long Run Growth”, Journal of Political Economy, 94 (5): 1002-1037.
- Taban, S., (2016), “ İktisadi Büyüme Kavram ve Modeller”, Ekin yayınevi, Bursa, 183.
- Tatoğlu, Y, F., 2013. ‘‘Panel Veri Ekonometrisi Stata Uygulamaları, Beta Yayınlar, İstanbul, 306s.
- Wang, K., (2011). “Health Care Expenditure and Economic Growth: Quantile Panel-Type Analysis” , Economic Modelling, 28: 1536-1549.
- Westerlund, J., ve Edgerton, D. L. (2007), “A Panel Bootstrap Cointegration Test”, Economics Letters, 97: 185–190.
- Woodhall, M., (1987). “Human capital concepts, Edited: G. Psacharopoulos, Economics of Education Research and Studies”, Advanges in Education, Pergamon Pres, The World Bank, Washington, DC, USA.
- Yardımcıoğlu, F., (2012). “OECD Ülkelerinde Sağlık ve Ekonomik Büyüme İlişkisinin Ekonometrik İncelenmesi”, Eskişehir Osmangazi Üniversitesi Sosyal Bilimler Dergisi, 13 (2): 27-47.