Healthcare Expenditure and Economic Growth Nexus in Nigeria: Impact and Causality Analyses

The ability of a man to utter a word or lift a finger for work, amounts the quality of health such a man has; hence the dictum, "Health is Wealth". This reality calls for adequate attention to healthcare. Therefore, this study examined healthcare expenditure and economic growth nexus in Nigeria using annual time series data spanning 1981 to 2024 sourced from CBN Statistical Bulletin and World Development Indicators. The specific objectives of this study are to determine the impact of healthcare capital expenditure, healthcare recurrent expenditure on economic growth proxy by real gross domestic product (RGDP) in Nigeria, and to investigate the direction of causality between healthcare capital expenditure, healthcare recurrent expenditure and RGDP in Nigeria. Life expectancy, secondary school enrolment, and population growth rate were included as control variables. The autoregressive distributed lag model and the Toda-Yamamoto causality test were employed in order to accomplish the objectives. Findings indicate that healthcare capital expenditure made positive impact on RGDP in both short-run and long-run with the former being significant at lag 2. Healthcare recurrent expenditure made negative impact on RGDP in both short-run and long-run with the former being significant at lag 1. Life expectance made insignificant negative and positive impact on RGDP in the short-run and long-run respectively. Secondary school enrolment and population growth rate made positive impact on RGDP in both short-run and long-run with the former being significant. A unidirectional causality from healthcare capital expenditure to RGDP, and from life expectancy to RGDP; and a bidirectional causality between healthcare recurrent expenditure and RGDP were established. Based on the findings the study recommends that government should allocate more funds to capital and recurrent expenditure as investment in health infrastructure with effective management of healthcare and partner with the private sector to improve healthcare dispensation in Nigeria.