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Health expenditure and growth dynamics in the SADC region: evidence from non-stationary panel data with cross section dependence and unobserved heterogeneity

Author

Listed:
  • Eugene Kouassi

    (University Felix Houphouet Boigny (UFHB))

  • Oluyele Akinkugbe

    (University of the Witwatersrand)

  • Noni Oratile Kutlo

    (University of Botswana (UB))

  • J. M. Bosson Brou

    (University Felix Houphouet Boigny (UFHB))

Abstract

This paper investigates the long run relationship between health care expenditure and economic growth, using panel data for 14 Southern African Development Community (SADC) member countries over the period 1995–2012. The non-stationarity and cointegration properties between health expenditure per capita and GDP per capita were examined, controlling for cross section dependence and heterogeneity between countries. Our results suggest that health expenditure and GDP per capita are non-stationary and cointegrated. These findings seem to confirm the notion that health expenditure is non-discretionary—health is a necessary good—in the SADC region. The estimated income elasticity is below unity but higher than what was obtained for the OECD regional grouping. The policy implication of our result is that adequate health care service provision should be a key objective of governmental intervention in the SADC region.

Suggested Citation

  • Eugene Kouassi & Oluyele Akinkugbe & Noni Oratile Kutlo & J. M. Bosson Brou, 2018. "Health expenditure and growth dynamics in the SADC region: evidence from non-stationary panel data with cross section dependence and unobserved heterogeneity," International Journal of Health Economics and Management, Springer, vol. 18(1), pages 47-66, March.
    • Handle: RePEc:kap:ijhcfe:v:18:y:2018:i:1:d:10.1007_s10754-017-9223-y
    DOI: 10.1007/s10754-017-9223-y
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    More about this item

    Keywords

    Health expenditure; Economic growth; non-stationary panels; Cross section dependence; Unobserved heterogeneity; Income elasticity;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health

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