The effect of health expenditure on average life expectancy: does government effectiveness play a moderating role?

Abstract

PurposeThis study investigates the impact of total health expenditure on life expectancy in a panel of 43 African countries from 2000 to 2018.Design/methodology/approachThe dynamic panel generalized method of moments (GMM) estimation method developed by Arellano and Bond (1991) is used in this study. This approach generates estimates that are heteroskedasticity and autocorrelation consistent, as well as controls for unobserved time-invariant country-specific effects and eliminates any endogeneity in the panel model.FindingsThe results reveal that health expenditure on its own has a positive significant influence on life expectancy. However, health expenditure via the moderating effect of government effectiveness reduces life expectancy. The authors also observe that school enrollment and the level of economic activity significantly drive life expectancy.Research limitations/implicationsThe study is limited to 43 out of 54 African countries, and it covers a period of 18 years: 2000 to 2018.Practical implicationsThe authors argue that larger health expenditure will aid in improving the life expectancy rate in Africa. However, in practice, this would be difficult given the needs of other priority sectors.Social implicationsSince most developing countries' health expenditures are small, a policy option is that healthcare services should be subsidized such that the poorest people can also access them.Originality/valueThe study differs from the previous attempts, and with this, the authors contribute significantly to the literature. First, to the best of the authors’ knowledge, the authors are unaware of any study considering the role of government effectiveness as a moderating factor in investigating the effect of health expenditure on life expectancy in the African context. Thus, the authors fill a yawning gap in the literature. Second, the authors employ a recent dataset with larger sample size. Finally, to address the problem of endogeneity and simultaneity bias, the authors use the system GMM technique.

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“…iii) The results provided by the literature reveal that economic growth improves health status (Sirag et al, 2017;Majeed et al, 2021;Bouchoucha, 2021;Wang et al, 2020a;Azam et al, 2022;Bunyaminu et al, 2022;Hendrawaty et al, 2022;Sial et al, 2022). On the other hand, Ecevit et al (2022) indicate that economic growth negatively affects health outcomes in Turkey.…”

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“…While De Micco et al (2022) do not write explicitly about the COVID-19 pandemic, their article is highly applicable as they present a review of the literature on the costs of introducing a new vaccine in Sub-Saharan Africa. Bunyaminu et al (2022) ask whether per capita health expenditure is the only factor responsible for differences in life expectancy or whether this is mitigated by the effect of good governance. Lytvyn et al (2022) write about innovations in healthcare regulations in the Ukraine, but oddly, for an article submitted in 2022, say nothing about the impact of war on the provision of healthcare in that nation.…”

“…However, challenges to population health may be experienced more acutely in developing nations with multiple urgent demands on public finance. Bunyaminu et al (2022) conducted a study examining health data from 43 African nations covering a period of 18 years from 2000 to 2018. The literature review supporting this work indicated that greater health expenditure increases life expectancy; however, this finding was challenged when the level of general economic development was factored into the equation.…”

“…Bunyaminu et al (2022) ask whether per capita health expenditure is the only factor responsible for differences in life expectancy or whether this is mitigated by the effect of good governance. Lytvyn et al (2022) write about innovations in healthcare regulations in the Ukraine, but oddly, for an article submitted in 2022, say nothing about the impact of war on the provision of healthcare in that nation.…”