A Note on the Health-Growth Nexus in Malaysia

This study examined the Granger causality between health care spending, economic growth, relative prices and life expectancy in Malaysia. This study covered the sample period from 1970 to 2010. Applying the newly developed cointegration test proposed by Bayer and Hanck (2010) to the Malaysian data, we found that the variables are cointegrated. The TYDL Granger causality test revealed that life expectancy and relative prices have bi-directional causality with health care spending. Nevertheless, there is evidence of unidirectional causality running from economic growth to health care spending in Malaysia. In addition, there is also unidirectional causality running from life expectancy to economic growth. In sum, health care spending does not stimulate economic growth directly but through its impact on improved health status as reflected by the life expectancy. Therefore, health care spending is important to improve the health status of the population and thus spur economic growth in Malaysia.
Source: Journal of Health Management - Category: Health Management Authors: Tags: Articles Source Type: research