Health and economic growth in Sudan: Cointegration and Granger causality analysis (1969-2015)

Elwasila S.E. MOHAMED

Abstract


Abstract. The relationship between human health and economic growth is complex. Its analysis is further complicated by the indicators used to measure health as indirectly observed. Improved health status requires increases in supply and demand for health care services driven by both economic and non-economic factors including GDP, GDP Per capita, inflation, population, fertility rates, life expectancy at birth, morbidity and mortality rates as well as education. On the other hand, health improvements measured for example by reductions in child mortality rates and increases in life expectancy rates have proven positive effects on economic growth. This study sought to explain the interplay between the state of health and economic growth in Sudan. The study is mainly an empirical investigation employing the econometric methods of Johansen cointegration test, the vector error correction modeling (VECM) and Granger causality analysis using annual time series data for the period 1969-2015. The cointegration test shows that a long-run equilibrium relationship exists between health status and economic growth. The VECM results show that health expenditure, under-five mortality and immunization have significant positive effects on economic growth in the long run, while total investment and CO2 emissions have no significant effect on GDP. In the short run, total investment and CO2 emissions have significant negative effect on GDP though in two years period. In the short run, GDP is mostly and significantly affected by total health expenditure and immunization but not by the under-five mortality rates. The error correction term has the correct negative sign showing that the dependent variable GDP converges to steady state equilibrium at speed of 32%. Granger causality analysis shows a unidirectional relationship running from GDP to health expenditure, while a unidirectional relationship running from under-five mortality rate to GDP is established. CO2 emissions are found to cause GDP with no sign of feedback effect. The study recommends that government should ensure macroeconomic stability in terms of stable growth, increase the resources to the health sector in order to achieve the under-five mortality MDG and effective coordination with donors to ensure full coverage of children immunization.

Keywords. Health, Health expenditure, Economic growth, Cointegration, VECM, Sudan.

JEL. H51, I10, F43.

Keywords


Health; Health expenditure; Economic growth; Cointegration; VECM; Sudan.

Full Text:


References


African Development Bank, (2013). African Economic Outlook. [Retrieved from].

Alkema, L., Chou, D., Hogan, D., Zhang, S., Moller, A.B., Gemmill, A., Ma Fat, D.,. Boerma, D., Temmerman, M., Mathers, C., & Say., L. (2015). Global, regional, and national levels and trends in maternal mortality between 1990 and 2015, with scenario-based projections to 2030: A systematic analysis by the UN maternal mortality estimation inter-agency group, The Lancet, doi. 10.1016/S0140-6736(15)00838-7

Bhalotra, S. (2007). Spending to save? State health expenditure and infant mortality in India, Health Economics, 16, 911-928. doi. 10.1002/hec.1260

Black, R.E., Laxminarayan, R., Temmerman, M., & Walker, N. (2016). Reproductive, maternal, newborn, and child health. Disease Control Priorities, third edition, volume 2. Washington, DC: World Bank. doi. 10.1596/978-1-4648-0348-2

Barro, R.J. (1996). Health, Human Capital and Economic Growth, Paper for the Program on Public Policy and Health, Pan American Health Organization and World Health Organization, Washington: Pan American Health Organization.

Barro, R.J. (2013). Health and Economic Growth, Annals of Economics and Finance, 14(1), 305-342.

Baumol, W.J. (1993). Health care, education and the cost disease: a looming crisis for public choice. Public Choice, 77(1), 17-28. doi. 10.1007/978-94-017-3402-8_3

Baumol, W.J. (1967). Macroeconomics of unbalanced growth: the anatomy of urban crisis. The American Economic Review, 57(3), 415-426.

Bloom, D.E., Canning, D., & Sevilla, J. (2004). The effect of health on economic growth: A production function approach, World Development, 32(1), 1-12. doi. 10.1016/j.worlddev.2003.07.002

Bourne, P.A. (2012) Under-five mortality, health and selected macroeconomic variables: The children behind the digits. Epidemiol, 2, 115. doi. 10.4172/2161-1165.1000115

Central Bureau of Statistics, (2009). National Baseline Household Survey, Republic of the Sudan. [Retrieved from].

Eltis, W. (1983). The interconnection between public expenditure and inflation in Britain, The American Economic Review, 73(2), 291-296.

Filmer, D., & Pritchett, L. (1997). Child mortality and public spending on health: How much does money matter? World Bank, Policy Research Working Paper, No.1864. [Retrieved from].

Filmer, D., & Pritchett, L. (1999). The impact of public spending on health: Does money matter?, Social Science &Medicine, 49(10), 1309-1323. doi. 10.1016/S0277-9536(99)00150-1

Getzen, T.E. (2014). Macroeconomic dynamics of health: Lags and variability in mortality, employment and spending, in A. Culyer, (ed), Encyclopedia of Health Economics, Oxford: Elsevier.

Granger, C.W.J. (1969). Investigating causal relations by econometric models and cross-spectral methods. Econometrica, 37(3), 424-438. doi. 10.2307/1912791

Farahani, M., Subramanian, S.V., & Canning, D. (2009). Effects of state-level public spending on health on the mortality probability in India, Program Health Economics, 19(11), 1361-1376. doi. 10.1002/hec.1557

Federal Ministry of Health, (2002). 25 Years Strategic Plan for Health Sector, Federal Ministry of Health, Khartoum, Republic of the Sudan. [Retrieved from].

Novignon, J., Olakojo, S.A., & Novignon, J. (2012). The effects of public and private health expenditure on health status in Sub-Saharan Africa: New evidence from panel data analysis, Health Economics Review, 2(1), 1-8. doi. 10.1186/2191-1991-2-22

Pablo, D.M., Marti,n G., & Carlos, D. (2017). New evidence of the health status and economic growth relationship, Panoeconomicus, 64(4), 439-459. doi. 10.2298/PAN150505020M

Preston, S.H. (1975). The changing relation between mortality and level of economic development. Population Studies, 29(2), 231–248.

Plümper, T., & Neumayer, E. (2013). Health spending, out-of-pocket contributions and mortality rates, Public Administration, 91(2), 403-418. doi. 10.1111/j.1467-9299.2012.02039.x

Sachs, J.D., & Warner, A.M. (1997). Fundamental sources of long-run growth, The American Economic Review, 87(2), 184-188.

Toda, H.Y., & Philips, P.C.B. (1993). Vector autoregrassions and causality. Econometrica, 61(6), 1367-1393. doi. 10.2307/2951647

Virts, J.R., & Wilson, G.W. (1984) Inflation and health care prices, Health Affairs, 3(1), 88-100. doi. 10.1377/hlthaff.3.1.88

Weil, D.N. (2005). Accounting for the effect of health on economic growth, NBER Working Paper, No.11455. doi. 10.3386/w11455

Weil, D.N. (2013). Health and Economic Growth, Handbook of Economic Growth, Volume 2.June 24, [Retrieved from].

World Health Organization. (2015). Sudan health profile 2015/ World Health Organization. Regional Office for the Eastern Mediterranean. No.WHO-EM/HST/231/E. [Retrieved from].

World Bank, (2017). World Development Indicators. [Retrieved from].

Zakir, M., & Phanindra, V.W. (1999). Factors affecting infant mortality rates: evidence from cross-sectional data. Applied Economics Letters, 6(5), 271-273. doi. 10.1080/135048599353203




DOI: http://dx.doi.org/10.1453/ter.v5i2.1645

Refbacks

  • There are currently no refbacks.




.......................................................................................................................................................................................................................................................................................................................................

Turkish Economic Review - Turk. Econ. Rev. - TER - www.kspjournals.org

ISSN: 2149-0414

Editor: ter@ksplibrary.org   Secretarial: secretarial@ksplibrary.org   Istanbul - Turkey.

Copyright © KSP Library