Economic growth and health in India: a panel cointegration assessment
by Rudra P. Pradhan; Tapan P. Bagchi
International Journal of Healthcare Technology and Management (IJHTM), Vol. 13, No. 4, 2012

Abstract: Literature cites plenty of support for positive impact of spending on health on a country's growth. However, following primarily a one-size-fit-all rather than differentiated policies to spend government grants to promote health, different Indian states report divergent results. To probe this anomaly, this paper delves deeper into any nexus between health expenditure and growth. Indian data for the 1980-2010 - one marked with India's strategic switch to free market economy - is used. This study finds that health expenditure and growth are cointegrated, indicating the presence of long run equilibrium relationship between them. Granger causality test confirms the existence of bidirectional causality, indicating existence of feedback between these two at national level, both in the short run and long run. However, this nexus gets complicated at individual state level where we find bidirectional, unidirectional and in some cases no causality between health expenditure and growth. The study suggests that policy makers would be wiser by probing deeper into state-specific conditions. Economic growth, particularly in the more prosperous and urbanised states, may be controlled significantly by factors other than health status of their citizens.

Online publication date: Sat, 15-Nov-2014

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