IMPACT OF HEALTH SPENDING DETERMINANTS ON ECONOMIC GROWTH IN NIGERIA: 2000-2023
Keywords:
Economic Growth; Health Spending; Policy Designs; DOLS; and Nigeria JEL Codes: 044, C31, E61, F34 and N47Abstract
Health is an important determinant of economic growth and GDP growth will likely increased health spending. Similarly, investments in healthcare can lead to an increase in labour productivity, thus increase in economic growth and subsequent increase in the wellbeing of the population. Therefore, understanding the determinants of health spending and its impact on economic growth is crucial for designing targeted interventions to improve healthcare access, quality, and equity in high-populated country as Nigeria. Thus, the paper examined the impact of health spending determinants on economic growth in Nigeria from 2000 to 2023 using time series data. The Dynamic Ordinary Least Squares (DOLS) Regression was employed as main analytical technique. The result revealed that health expenditure per capita is positively correlated with economic growth. On the other hand, findings indicated that recurrent health expenditure appears to affect economic growth significantly and negatively in the long-run. Similarly, the estimated impact of capital health expenditure on economic growth is positive but insignificant in the long run. While, the results indicated that out-of-pocket health spending affects economic growth negatively in the long run. Therefore, the paper recommended that the Federal Ministry of Health should intensify its investments in healthcare infrastructure in order to increase health expenditure per capita. Further, a thorough audit of recurrent healthcare spending by the Federal Ministry of Finance that will likely enhance the efficiency and accountability of these expenditures is recommended. Also, the Federal Ministry of Health should actively promote the development of the healthcare industry and increase fixed asset investment in the healthcare sector. Additionally, in addressing the negative effect of out-of-pocket health spending on economic growth, the Federal Ministry of Health in collaboration with the National Health Insurance Authority, should strengthen the already existing National Health Insurance Scheme in order to address challenges such as inadequate funding, drug stock outs, inefficient supply chain management, and regional disparities in pharmaceutical infrastructure.