Healthcare Expenditure and Economic Growth in Sub-Saharan Africa

Abstract

This paper investigated the effect of health expenditure on economic growth in Sub Saharan Africa. The linear dynamic generalized method of moments instrumental variable (GMM-IV) was used on a panel data of 38 Sub-Saharan African countries over the period 2000-2016. Findings reveal that health expenditure significantly improves economic growth in Sub Saharan Africa. The separate effects of Public and private health expenditures have also shown a significant positive relationship on economic growth. In addition to health expenditure, other determinants like gross domestic saving, foreign direct investment, and labor force brought a statistically significant improvement on economic growth, whereas official development assistance has a statistically insignificant effect on economic growth. This study concluded that health expenditure is an important element in attaining improved economic growth in Sub-Saharan African Countries as it assured a healthy workforce and the country’s populace. Therefore, increasing the amount of health expenditure allocated to the health sector yields a better economy. More on, revising policies to improve gross domestic savings and foreign direct investment also assure a better economic growth.