Health Care Expenditures and GDP in Sub-Saharan African Countries: Evidence from Panel Data

Abstract

This paper examines the long-run economic relationship between health care expenditure (NCE) and gross domestic product (CDP) for 32 sub-Saharan African countries over the period 1995-2009. Using panel unit roots and cointegration techniques, we found that there is a long run relationship between NCE and CDP in the countries. The paper also tests the mean reversion and cointegration properties among health cure expenditure and GDP, health care expenditure, total population above age 65, and population below age 15, and ultimately, measuring income elasticity of health care. Country-specific income elasticities were thus derived for the 32 Countries. We tried to obtain robust estimates by controlling for both cross section dependence and unobserved heterogeneity in the analvsis. The results scent to suggest that health care is a necessity rather than a luxury with income elasticity value of 0.46 and further shows that the demographic factors are significant in explaining health variations across Sub-Sahara Africa Countries,