Impact of Private Health Expenditure on the Economic Growth of Pakistan

Abstract

Aim of the Study: This study examines the influence of private health expenditures on Pakistan's economic growth.

Methodology: This study took data from 1985 to 2019, utilizing an ARDL approach and various econometric methods to conclude. The model applied in this study is structured around a specific theoretical framework. The growth equation, extending the basic neoclassical growth model, follows Barro (1996) as developed by Bloom and Canning (2004) and subsequently used by other researchers.

Findings: Findings reveal a significant negative relationship between age dependency and current health expenditure on economic growth, while private health expenditure and population demonstrate a strong positive effect on growth. Private health expenditures promote healthy human capital which results in economic growth.

Conclusion: Pakistan's health sector is substantially impacted by population dynamics, and although health expenditures are generally progressive, some subcategories at provincial and regional levels show a regressive trend. The private sector plays a critical role in health service provision, influenced by either government policy or the absence thereof.