The health-economic growth nexus: a lower and middle-income Sub-Saharan economies comparison
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Date
2020
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Publisher
University of Zululand
Abstract
The relationship between health and economic growth has been examined extensively during the past 30 years in developed and European countries. However, there are few studies that have investigated this relationship in Sub-Saharan Africa countries. The study investigated the relationship between health and economic growth by comparing low and middle-income Sub-Saharan Africa countries from 2000-2016. The study employed data from World Bank Indicators (WDI) in the World Bank database. This study is unique amongst existing studies in two respects. Firstly, it investigates the relationship between health and economic growth by comparing lower-income with middle-income Sub-Saharan Africa countries, since these countries have not received enough scholarly attention. Secondly, the study introduces Principal Component Analysis (PCA) with an aim to create a health index, since no such measure variable exists for health.
The study employed two Panel Vector Autoregressive models (PVAR) to investigate the relationship between health and economic growth. A Panel Vector Autoregressive model is an appropriate model for large panel data sets (Munyengwa, 2012). The results of the study support the Endogenous Growth Theory, which emphasises the crucial role that is played by health as a determinant or engine of economic growth through human capital effect. An improvement in health by 10% raises the economic growth rate by 2% in the short run. The study found a strong positive, statistically significant influence of health on economic growth in lower-income Sub-Saharan Africa countries. The study also found a positive, but statically insignificant impact of health on economic growth in middleincome Sub-Saharan Africa countries. These findings are very important to policymakers in the respective countries.
Description
A dissertation submitted in fulfilment of the requirement for the Degree of Master of Commerce in the Department of Economics, Faculty of Commerce, Administration and Law, at the University of Zululand, 2020.
Keywords
Health-Economic growth nexus, World Development Indicators, Principal Component Analysis, Panel Vector Autoregressive