Health expenditure, and economic growth in Sub‐Saharan African countries: The role of governance quality

Abstract

Abstract This study assessed the moderating influence of governance quality on the effect of health expenditure on economic growth, and exploring the analysis further to determine whether there exists possible heterogeneity in the distribution of this effect amongst 27 Sub‐Saharan African countries for the period 2005–2021. Public health expenditure (HExp), and six indicators of governance quality (control of corruption [Ccor], rule of law [Rlaw], political stability [Post], voice and accountability [Vacc], government effectiveness [Geft], and regulatory quality [Regq]) were utilised as proxy(ies) for HExp, and governance respectively. Two‐step dynamic panel data system generalised method of moments (DPD‐SGMM) estimation technique was used to estimate the conditional mean effect, while Possible heterogeneity in the distribution was explored using the method of moments quantile regression (MM‐QR); the study relied on annual time‐series indices of governance as developed by Kaufman and Kraay. Estimates demonstrate that: (i) while a significant positive relationship was observed between HExp and economic growth, Rlaw, Vacc, and Regq significantly reduce economic growth, (ii) interaction between HExp, and Vacc, Regq, individually increases the potency of HExp to stimulate economic growth by 2.2%, and 1.2% respectively, as against 1.3% reduction for Rlaw, (iii) no heterogeneity was observed in the distribution of these amongst the sample of countries.