Public health expenditure and economic development: The case of South Africa between 1996 and 2016

Abstract

A nation’s financial commitment to health investment and expenditure has a corresponding effect on its economic growth and development. Understanding the interplay and underlying connection between health expenditure and national development is critical in forecasting the wellbeing of a nation, vis-à-vis health preparedness. In this paper, we explore the impact of public healthcare expenditure on economic development in South Africa between 1996 and 2016. The autoregressive distributed lag model, error-correction model and a time series panel were adopted in analysing this effect. Empirical findings demonstrate a positive relationship between PHE and HDI in South Africa. Further, health investment may increase the income of health workers and provide for better working conditions and facilities to save lives. In addition, the relationship between CPI and economic development is insignificant, however CPI mediates PG.