Health Investment as a Catalyst for Enterprise Development and Economic Growth

Abstract

The connection between the healthcare expenditure and the major health indicators, including the life expectancy and mortality rates, is complex (Van den Heuvel & Olaroiu, 2017). There are indicators of empirical evidence that suggests that higher levels of investment in healthcare are linked to better health conditions, including longer life expectancy and decreased mortality (Galvani-Townsend et al., 2022). Nevertheless, in low and middle-income countries (LMICs), funding of healthcare remains insufficient, which is a challenge to the health and economic growth of the population (WHO, 2020). This discussion examines the burden of healthcare spending on life expectancy, (maternal and child mortality) in the four World Bank income category countries namely low-income, lower-middle-income, upper-middle-income and high-income countries. Using a panel dataset of 217 countries, 1999-2020, the research adopts Fixed Effects Model (FEM) and Random Effects Model (REM) with Hausman test indicating the use of FEM as an estimation method. Results indicate that higher expenditure on healthcare, greater life expectancy, and lower death rates overlap to the growth of the economy in all categories of income. In addition, the impact of control variables is income level dependent, and thus, it highlights the subtlety of the relationship between health investment and economic performance. The question is that of the precarious role of healthcare spending in developing human capital, productivity, and long-term economic growth.