The Connection Between Investing in Health and Achieving Economic Growth

The Connection Between Investing in Health and Achieving Economic Growth

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Contrary to the well recognized and studied causality running from economic growth to health, this study will present evidence of the reverse causation - from health to economic growth. The processes and connections that trigger the relationship between investment in health and the achievement of economic growth will be observed. The study will go through a review and an analysis of the effects that health investment has on economic growth and the economic rationale for investing in health. There are going to be some analysis and studies of the contribution of health to wealth and societal well-being, how better health serves as a predictor of economic growth and the degree to which economic growth is explained by health expenditures in Albania. The estimated model will be offered by all fundamentals of regression analyzes which will identify the relation between health expenditure per capita in Albania and GDP per capita in order to show if there is any correlation between those two variables. All the data are taken by World Bank for the period of 1995 to 2011. After reasonable analysis, it will be demonstrated that there is a strong relationship between investment in health and economic growth. Based on the evidence and analysis of this paper, health expenditures should be considered as an investment tool toward the achievement of economic and social goals.
Keywords: Health, Investment, Economic Growth, GDP per Capita, Disease, Human Capital, Income, Productivity.
JEL Classification: I15, H51

1. Introduction
Health is an invaluable asset for human beings. Being healthy and living a long life are the most important goals of every individual. Good health has a significant importance for human existence and is a very important so...

... middle of paper ...

...econd or in studying how GDP per capita varies with changes in health expenditure per capita. The data for the regression are taken from World Bank database and Figure 1 shows the values of the two variables in Albania over the period 1995-2011.
Rivera and Currais estimated the relationship between health and economic growth of The Organization for Economic Co-operation and Development (OECD) member countries over the period 1960-1990 and showed that countries with higher health expenditures had higher economic growth .
Other authors have also made research on the impact of health expenditures on economic growth. A study in thirty-three developing countries over the period 1990-1998, using the generalized Solow growth model and panel data model, resulted in a positive and significant impact of health expenditure on economic growth. (Mojtahed and Javadipour, 2004).

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