Effects of Government Healthcare Expenditure on Economic Growth Based on Spatial Durbin Model: Evidence from China

  • Xuewei ZHANG School of Economics and Management, Beijing University of Technology, Beijing, China
  • Zong GANG School of Economics and Management, Beijing University of Technology, Beijing, China
  • Xiao DONG School of Finance, Henan University of Economics and Law, Zhengzhou, Henan, China
Keywords: Healthcare expenditure;, Spatial Durbin model;, Economic growth

Abstract

Background: The proportion of government healthcare expenditure in China increases due to rapid economic development in recent years. The growth of government healthcare expenditure can promote physical health improvement of human capitals and thereby facilitate economic growth. Hence, exploring the effects of government healthcare expenditure on economic growth is important.

Methods: Spatial correlation of economic growth under different spatial weights was tested, and the effects of government healthcare expenditure on economic growth were analyzed by constructing a spatial Durbin model with the panel data of 31 provinces in China gathered from 2005 to 2017.

Results: Government healthcare expenditure in China significantly and positively affects economic growth under three spatial weight matrices. The spatial weight of economic distance influences economic growth more significantly compared with the 0–1 spatial weight and the spatial weight of geographical distance. The total and the direct effects of government healthcare expenditure are significantly positive. Furthermore, the direct effects are significant, whereas the indirect effects show different degrees of significance.

Conclusion: The total effect of government healthcare expenditure on economic growth is significant and positive, with direct effects exceeding the indirect ones. Hence, the China’s government must continue to increase financial investment to public health services to promote high-quality economic growth in the country.

References

1. China State Statistical Bureau (2006-2018). China Statistical Yearbook. Beijing: China Statistical Publishing House.
2. China State Statistical Bureau (2006-2018). China Health Statistical Yearbook. Beijing: China Statistical Publishing House.
3. Halıcı-Tülüce NS, Doğan İ, Dumrul C (2016). Is income relevant for health ex-penditure and economic growth nexus? Int J Health Econ Manag, 16(3): 23-49.
4. Dikmen N (2017). The relationship between government expenditure on health and GDP in Turkey. Adv Appl Econ Res, 6(6): 73-89.
5. Piabuo SM, Tieguhong JC (2017). Health expenditure and economic growth-a re-view of the literature and an analysis be-tween the economic community for cen-tral African states (CEMAC) and selected African countries. Health Econ Rev,7: 23.
6. Azam M, Khan AQ, Ozturk I (2019). The effects of energy on investment, human health, environment and economic growth: empirical evidence from China. Environ Sci Pollut Res, 26(4): 10816-25.
7. Chaabouni S, Abednnadher C (2014). The determinants of health expenditures in Tunisia: an ARDL bounds testing ap-proach. Int J Info Syst Serv Sec, 6(10): 72.
8. Murthy VN, Okunade AA (2016). Determi-nants of US health expenditure: evidence from autoregressive distributed lag (ARDL) approach to cointegration. Econ Model, 59(12): 67-73.
9. Atilgan E, Kilic D, Ertugrul HM (2017). The dynamic relationship between health ex-penditure and economic growth: is the health-led growth hypothesis valid for Turkey? Eur J Health Econ, 18(56): 567-74.
10. Mladenović I, Milovančević M, Mladenović SS, et al. (2016). Analyzing and manage-ment of health care expenditure and gross domestic product (GDP) growth rate by adaptive neuro-fuzzy technique. Comput Hum Behav, 64(11): 524-30.
11. Picatoste J, Ruesga-Benito SM, González-Laxe F (2018). Economic environment and health care coverage: analysis of so-cial acceptance of access restrictive poli-cies applied in Spain in the context of economic crisis. J Clean Prod, 172(1): 3600-08.
12. Baltagi BH, Moscone F (2010). Health care expenditure and income in the OECD reconsidered: evidence from panel data. Econ Model, 27(7): 804-11.
13. Wang KM (2011). Health care expenditure and economic growth: quantile panel-type analysis. Econ Model, 28(7): 1536-49.
14. Kiran B (2014). Testing the impact of educa-tional expenditures on economic growth: new evidence from Latin American coun-tries. Qual Quant, 48(5): 1181-90.
15. Tuna K, Kayacan E, Bektaş H (2015). The Relationship between Research & Devel-opment Expenditures and Economic Growth: The Case of Turkey. Proc Soc Be-hav Sci, 195(7):501-7.
16. Rana RH, Alam K, Gow J (2019). Health expenditure and gross domestic product: causality analysis by income level. Int J Health Econ Manag, 16(7):1-23.
17. Chen W, Clarke JA, Roy N (2013). Health and wealth: Short panel Granger causality tests for developing countries. The Journal of International Trade and Economic Develop-ment, 23(6): 755–784.
18. Lesage JP, Pace K (2008). Spatial economet-ric modeling of origin-destination flows. J Regional Sci, 48(5):941-67.
19. Barro RJ (1990). Government Spending in a Simple Model of Economic Growth. J Polit Econ, 98(10):103-25.
20. DelaHoz-Rosales B, Camacho-Ballesta J, Tamayo-Torres I (2019). Human devel-opment impact on entrepreneurship: an international analysis from capability ap-proach. DYNA, 94(6):598.
21. Li YB, Che MY, Yang XY, et al (2018). Rel-evance research between per capita health expenditure and economic growth in China: based on VAR model. Chin Health Resour, 21(3):111-15.
22. Pauhofova I, Stehlikova B, Kljucnikov A, et al (2018).Spatial and sectoral conditionali-ty of the average monthly nominal wage in the Slovak Republic. Transform Bus Econ, 17(3):155-69.
23. Behera DK, Dash U (2019). Impact of mac-ro-fiscal determinants on health financ-ing: empirical evidence from low-and middle-income countries. Global Health Res Policy, 9(8): 4-21.
24. Wang XQ (2018). Economic growth effect of government health expenditure in China: Empirical analysis based on spatial econometric model. Rev Econ Res, 34(6): 52-63.
25. Palència L, Espelt A, Rodríguez-Sanz MB, et al. (2013). Trends in social class inequali-ties in the use of health care services within the Spanish National Health Sys-tem, 1993–2006. Eur J Health Econ, 14(4): 211-19.
Published
2020-02-01
How to Cite
1.
ZHANG X, GANG Z, DONG X. Effects of Government Healthcare Expenditure on Economic Growth Based on Spatial Durbin Model: Evidence from China. Iran J Public Health. 49(2):283-293.
Section
Original Article(s)