IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/90338.html
   My bibliography  Save this paper

Investigating The Dynamic Effect of Healthcare Expenditure and Education Expenditure On Economic Growth in Organisation of Islamic Countries (OIC)

Author

Listed:
  • Abdul Wahab, Abdul Azeez Oluwanisola
  • Kefeli, Zurina
  • Hashim, Nurhazirah

Abstract

The socio-economic development level of any country has been significantly attached to the state of healthcare and well-being of its people. Moreover, it is unequivocal that healthy people have substantial influences on economic advancement of a country because when they live longer there is tendency that they will be more productive. On the other hand, the standpoint of education on economic growth cannot be underscored as it serves as method of evolution and progression of personalities and an essential indicator of broad production of the national income. Nevertheless, this paper examines the dynamic effect of healthcare expenditure and education expenditure on economic growth using evidence from Organization of Islamic Cooperation (OIC) countries. The study applied Pool Mean Group (PMG) method by using 1990 to 2015 data. The study reveals a robust long-run co-integrating relationship between healthcare expenditure, education expenditure, research and development and the economic growths of OIC countries. Besides, the short-run effects indicates that, healthcare expenditure per capita significantly impact economic growth of OIC countries, while the education expenditure and research and development (technology) were insignificantly impact economic growth of OIC countries in the short-run. Albeit, the findings of the study short-run specific-effects concluded that, there is existence of a co-integrating relationship between the healthcare, education, technology and economic growth in 36 out of the 56 OIC countries, while 20 other countries have no co-integrating relationship with the economic growths. However, the study suggests that healthcare and education are device to further attain economic growth and development in OIC countries if well managed and administered.

Suggested Citation

  • Abdul Wahab, Abdul Azeez Oluwanisola & Kefeli, Zurina & Hashim, Nurhazirah, 2018. "Investigating The Dynamic Effect of Healthcare Expenditure and Education Expenditure On Economic Growth in Organisation of Islamic Countries (OIC)," MPRA Paper 90338, University Library of Munich, Germany, revised 19 Oct 2018.
    • Handle: RePEc:pra:mprapa:90338
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/90338/1/MPRA_paper_90328.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hartwig, Jochen, 2008. "What drives health care expenditure?--Baumol's model of 'unbalanced growth' revisited," Journal of Health Economics, Elsevier, vol. 27(3), pages 603-623, May.
    2. Davood Behbudi & Siab Mamipour & Azhdar Karami, 2010. "Natural Resource Abundance, Human Capital And Economic Growth In The Petroleum Exporting Countries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 35(3), pages 81-102, September.
    3. Don Webber, 2002. "Policies to stimulate growth: should we invest in health or education?," Applied Economics, Taylor & Francis Journals, vol. 34(13), pages 1633-1643.
    4. Jack, William & Lewis, Maureen, 2009. "Health investments and economic growth : macroeconomic evidence and microeconomic foundations," Policy Research Working Paper Series 4877, The World Bank.
    5. Wang, Kuan-Min, 2011. "Health care expenditure and economic growth: Quantile panel-type analysis," Economic Modelling, Elsevier, vol. 28(4), pages 1536-1549, July.
    6. LI, Hongyi & HUANG, Liang, 2009. "Health, education, and economic growth in China: Empirical findings and implications," China Economic Review, Elsevier, vol. 20(3), pages 374-387, September.
    7. David Cutler & Angus Deaton & Adriana Lleras-Muney, 2006. "The Determinants of Mortality," Journal of Economic Perspectives, American Economic Association, vol. 20(3), pages 97-120, Summer.
    8. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-963, September.
    9. Zijun Wang, 2009. "The determinants of health expenditures: evidence from US state-level data," Applied Economics, Taylor & Francis Journals, vol. 41(4), pages 429-435.
    10. Barro, Robert J. & Lee, Jong Wha, 2013. "A new data set of educational attainment in the world, 1950–2010," Journal of Development Economics, Elsevier, vol. 104(C), pages 184-198.
    11. Naeem Ur Rehman Khattak & Jangraiz Khan, 2012. "Does Health Accelerate Economic Growth in Pakistan?," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 2(4), pages 506-512.
    12. Tang, Chor Foon, 2011. "Multivariate Granger Causality and the Dynamic Relationship between Health Care Spending, Income and Relative Price of Health Care in Malaysia," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 52(2), pages 199-214, December.
    13. Katarina R. I. Keller, 2006. "Investment In Primary, Secondary, And Higher Education And The Effects On Economic Growth," Contemporary Economic Policy, Western Economic Association International, vol. 24(1), pages 18-34, January.
    14. Wolff, Edward N, 2001. "The Role of Education in the Postwar Productivity Convergence among OECD Countries," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 10(3), pages 735-759, September.
    15. Caselli, Francesco & Esquivel, Gerardo & Lefort, Fernando, 1996. "Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Journal of Economic Growth, Springer, vol. 1(3), pages 363-389, September.
    16. Chandra Shekhar Kumar*, 2006. "Human capital and growth empirics," Journal of Developing Areas, Tennessee State University, College of Business, vol. 40(1), pages 153-179, September.
    17. Robert J. Barro, 2001. "Human Capital and Growth," American Economic Review, American Economic Association, vol. 91(2), pages 12-17, May.
    18. Mohsen Mehrara, 2011. "Health Expenditure and Economic growth: An ARDL Approach for the Case of Iran," Journal of Economics and Behavioral Studies, AMH International, vol. 3(4), pages 249-256.
    19. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    20. Asteriou, D. & Agiomirgianakis, G. M., 2001. "Human capital and economic growth: Time series evidence from Greece," Journal of Policy Modeling, Elsevier, vol. 23(5), pages 481-489, July.
    21. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October.
    22. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    23. Thorvaldur Gylfason & Gylfi Zoega, 2003. "Education, Social Equality and Economic Growth: A View of the Landscape," CESifo Economic Studies, CESifo Group, vol. 49(4), pages 557-579.
    24. Psacharopoulos, George (ed.), 1987. "Economics of Education," Elsevier Monographs, Elsevier, edition 1, number 9780080333793.
    25. Abdul Azeez Oluwanisola Abdul Wahab, 2017. "Modeling the Effect of Healthcare Expenditure and Education Expenditure on Labour Productivity: A Study on OIC Countries," GATR Journals jber134, Global Academy of Training and Research (GATR) Enterprise.
    26. Self, Sharmistha & Grabowski, Richard, 2004. "Does education at all levels cause growth? India, a case study," Economics of Education Review, Elsevier, vol. 23(1), pages 47-55, February.
    27. Svitlana Maksymenko & Mahbub Rabbani, 2011. "Economic Reforms, Human Capital, And Economic Growth In India And South Korea: A Cointegration Analysis," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 36(2), pages 39-59, June.
    28. Pritchett, Lant, 1996. "Where has all the education gone?," Policy Research Working Paper Series 1581, The World Bank.
    29. Kwabena Gyimah-Brempong & Oliver Paddison & Workie Mitiku, 2006. "Higher education and economic growth in Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 42(3), pages 509-529.
    30. Musila, Jacob. & Belassi, Walid., 2004. "The impact of education expenditures on economic growth in Uganda: evidence from time series data," Journal of Developing Areas, Tennessee State University, College of Business, vol. 38(1), pages 123-133, September.
    31. Naeem Ur Rehman Khattak & Jangraiz Khan, 2012. "Does Health Accelerate Economic Growth in Pakistan?," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 2(4), pages 506-512, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ayfer Ozyilmaz & Yuksel Bayraktar & Esme Isik & Metin Toprak & Mehmet Bilal Er & Furkan Besel & Serdar Aydin & Mehmet Firat Olgun & Sandra Collins, 2022. "The Relationship between Health Expenditures and Economic Growth in EU Countries: Empirical Evidence Using Panel Fourier Toda–Yamamoto Causality Test and Regression Models," IJERPH, MDPI, vol. 19(22), pages 1-17, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lenkei, Balint & Mustafa, Ghulam & Vecchi, Michela, 2018. "Growth in emerging economies: Is there a role for education?," Economic Modelling, Elsevier, vol. 73(C), pages 240-253.
    2. Bahar Bayraktar-Sağlam, 2016. "The Stages of Human Capital and Economic Growth: Does the Direction of Causality Matter for the Rich and the Poor?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(1), pages 243-302, May.
    3. Jude Eggoh & Hilaire Houeninvo & Gilles-Armand Sossou, 2015. "Education, Health And Economic Growth In African Countries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 40(1), pages 93-111, March.
    4. Voxi Heinrich Amavilah & Antonio Rodríguez Andrés, 2024. "Knowledge Economy and the Economic Performance of African Countries: A Seemingly Unrelated and Recursive Approach," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 110-143, March.
    5. Trofimov, Ivan D. & Baawi, Nurulhana A., 2020. "Human Capital: State of the Field and Ways to Extend the Concept," MPRA Paper 107039, University Library of Munich, Germany.
    6. Ramazan Sari & Ugur Soytas, 2006. "Income and Education in Turkey: A Multivariate Analysis," Education Economics, Taylor & Francis Journals, vol. 14(2), pages 181-196.
    7. Rogers, Mark Llewellyn, 2008. "Directly unproductive schooling: How country characteristics affect the impact of schooling on growth," European Economic Review, Elsevier, vol. 52(2), pages 356-385, February.
    8. Måns Söderbom & Francis Teal, 2003. "Openness and human capital as sources of productivity growth: An empirical investigation," CSAE Working Paper Series 2003-06, Centre for the Study of African Economies, University of Oxford.
    9. Eftimoski, Dimitar, 2022. "On the inconclusive effect of human capital on growth: A new look at extended specifications," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 708-727.
    10. Saima Nawaz & M. Idrees Khawaja, 2016. "Fiscal Policy, Institutions And Growth: New Insights," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(05), pages 1251-1278, December.
    11. Vijay P. Ojha & Joydeep Ghosh & Basanta K. Pradhan, 2022. "The role of public expenditure on secondary and higher education for achieving inclusive growth in India," Metroeconomica, Wiley Blackwell, vol. 73(1), pages 49-77, February.
    12. Antonio Paradiso & Saten Kumar & B. Bhaskara Rao, 2013. "The growth effects of education in Australia," Applied Economics, Taylor & Francis Journals, vol. 45(27), pages 3843-3852, September.
    13. Glawe, Linda & Wagner, Helmut, 2020. "China in the middle-income trap?," China Economic Review, Elsevier, vol. 60(C).
    14. Bayraktar-Sağlam, Bahar & Yetkiner, Hakan, 2014. "A Romerian contribution to the empirics of economic growth," Journal of Policy Modeling, Elsevier, vol. 36(2), pages 257-272.
    15. Di Liberto, Adriana, 2008. "Education and Italian regional development," Economics of Education Review, Elsevier, vol. 27(1), pages 94-107, February.
    16. Voxi Heinrich Amavilah & Antonio Rodriguez Andres, 2022. "Knowledge Economy and the Economic Performance of African Countries: A Seemingly Unrelated and Recursive Approach," Working Papers 57, The German University in Cairo, Faculty of Management Technology.
    17. Fatema Alaali & Jennifer Roberts & Karl Taylor, 2015. "The Effect of Energy Consumption and Human Capital on Economic Growth: An Exploration of Oil Exporting and Developed Countries," Working Papers 2015015, The University of Sheffield, Department of Economics.
    18. Zhang, Chuanguo & Zhuang, Lihuan, 2011. "The composition of human capital and economic growth: Evidence from China using dynamic panel data analysis," China Economic Review, Elsevier, vol. 22(1), pages 165-171, March.
    19. Altinok, Nadir & Aydemir, Abdurrahman, 2017. "Does one size fit all? The impact of cognitive skills on economic growth," Journal of Macroeconomics, Elsevier, vol. 53(C), pages 176-190.
    20. Bloom, David E. & Canning, David & Kotschy, Rainer & Prettner, Klaus & Schünemann, Johannes, 2024. "Health and economic growth: Reconciling the micro and macro evidence," World Development, Elsevier, vol. 178(C).

    More about this item

    Keywords

    Economic growth; healthcare expenditure; education expenditure; OIC countries;
    All these keywords.

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:90338. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.