Testing the Cointegrating Relationship between Health Care Expenditure and Economic Growth in Nigeria

Abstract

This paper examined the relationship between health care expenditure and economic growth in Nigeria for the period 1970-2009. We employed the multivariate cointegration technique proposed by Johansen and found the existence of at least one cointegrating vector describing a long run relationship among economic growth, foreign aids, health expenditure, total saving, and population. This is further confirmed by the Hassen Parameter instability test. The cointegrating equation, however, shows some deviations in terms of the signs of the coefficients of foreign aids and health expenditure which partly may be attributed to some diversification of foreign aids to other uses or that the allocation to health services is grossly inadequate. It is therefore suggested that an appreciable proportion of the national budget be allocated to the health care services to have a more robust health care programmes capable of fostering economic growth in Nigeria.