Abstract:

Health expenditures, which are an important element of human capital, are current expenditures in the short-term, and it is an investment expenditure due to increase the human capital stock in the long-term. Health expenditures affect public health and human capital level. In addition, health expenditures are expected to contribute to economic growth. For this reason, studies on the determination of the effect of health expenditures on economic growth have increased in the literature in recent years. In this study, health expenditures-economic growth nexus was investigated through panel cointegration and panel causality tests, using annual data of MIST (Mexico, Indonesia, South Korea and Turkey) countries for the period 2000-2018. The cointegration test reveals a long-run relationship between variables. According to the estimated cointegration coefficient, health expenditures affect economic growth positively. The causality test reveals that there is a unidirectional causality from economic growth to health expenditures in the short-run and that there is a bidirectional causality between health expenditures and economic growth in the long-run. These results are similar to the majority of studies in the literature and support the health-led growth hypothesis.

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