Impact of health on economic growth in South Asia: evidence from the era of high economic growth

Abstract Purpose The aim of this paper is to investigate the impact of health outcomes and health expenditure on economic growth across eight South Asian countries during 2000-21, a period in which these economies recorded an average annual economic growth of more than 6%, making it one of the fastest growing regions of the world. Methodology In this study the panel data for eight cross sections over a time period of 22 years was analysed. Gross Domestic Product per capita is the dependent variable and health indicators like life expectancy at birth, under five mortality, domestic private health expenditure and current health expenditure per capita are main explanatory variables. General government expenditure as a percentage of GDP is included as a control variable. The panel fixed effect model is employed to analyse the relationship. Findings The results indicate a significant and positive relationship between health outcomes, health expenditures and economic growth across South Asia. In particular, a 1% increase in life expectancy is associated with 0.14% rise in economic growth. Reduction in under five mortality also increases economic growth. However, this impact is somewhat less than that of thelife expectancy. Similarly, health expenditure has a positive impact on the economic growth. Policy implications With significant reliance on private health expenditure, there is a risk of financial exclusion and increased out-of-pocket expenditure burden on poor households in South Asia. Policies must aim to enhance financial risk protection through public insurance schemes and universal health coverage, as envisioned in SDG Target 3.8. Originality To the best of our knowledge this is the unique study that has attempted to analyse the disaggregated effects of public versus private health expenditure in the context of South Asia. The study has been carried out for a time period in which South Asia witnessed improvements in both health outcomes and income. This dual progress is not only a significant achievement in its own right but also central to the region’s advancement toward the United Nations Sustainable Development Goals, especially Goal 3 i.e., Good Health and Well-being.