Health human capital and economic growth in sub-Saharan Africa : a dynamic panel data analysis

Abstract

This study set out to determine the relationship between health human capital and economic growth for 30 sub Saharan African countries during the period 1995 and 2014. The study did this in two parts. First, we first estimated a model of health production to ascertain the impact of economic growth and other factors on population health. Second, an economic growth model was estimated focusing on the impact of the stock of, investments into and quality of health on economic growth rates. The analysis was extended to examine the long term and short term influence of health stock on economic growth. Due to expected endogeneity in the health and growth models, the Arellano Bond two step Generalised Method of Moments (GMM) estimator was employed. Using life expectancy and infant mortality as measures of health, the study found that population health had a significant long term impact on economic growth in the region with a 1 percent rise in average life expectancy leading to a 0.3 percent rise in GDP per capita in 10 and 12 years. Similarly, infant mortality has a negative significant impact on growth when lagged by 12 years. While life expectancy did not show evidence of a short term impact on growth, infant mortality had a negative and significant impact on economic growth in the short term. As for the determinants of population health, education, health expenditure, health care quality and alcohol consumption significantly determined both the levels of infant mortality and life expectancy in the region. The study concluded that the accumulation of population health capital would raise economic growth levels in the long term for the region. To exploit this growth effect, there is need for policy makers to invest in improving population health by focusing on the main determinants of health (education, health quality, health expenditure and life style factors). Key Words: Health human capital, economic growth, long term, Sub Saharan Africa, Dynamic Panel Data, GMM difference estimator