Scrutinizing Public-Private Sector Investment Spending and Budgetary Deficit in the Health Sector of Pakistan: A Time Series Approach

Abstract

The public and private sector spending is crucial for appropriate resource allocation. Private sector spending makes the government to be lenient since the obligations to provide facilities to the general public are shared with the private sector. Meanwhile, public sector spending rests at the allocation of the budget. A heavy budgetary deficit can cause the government to reduce its spending. This study attempted to evaluate the interplay of private-sector spending, budgetary deficit, and public-sector spending in the health sector of Pakistan within the period from 1980 to 2023. The standard econometric technique of Autoregressive Distributed Lag (ARDL) is incorporated to find the desired results. Based on the empirical results, it is found that private and public sector spending on the health sector is a substitute for each other. At the same time, the budgetary deficit is found to increase government spending on the health sector. The study suggests that the private sector is sufficient in covering health-related issues; thus, the government can locate another sector that needs financial support. Also, a manageable budgetary deficit is not harmful if spending is carried out in the health sector.