Environmental Quality, Economic Growth, and Health Expenditure: Empirical Evidence from a Panel of African Countries

Abstract

This study investigates the relationship among environmental quality, economic growth and health expenditure in 47 African countries using both static (pooled OLS and fixed/random effect) and dynamic (system GMM) estimation methods. Data covering the period 2000 to 2018 are employed and three proxies (carbon dioxide, nitrous oxide and methane emission) are used to capture the effect of environmental quality. The findings of the study indicate evidence of a positive and significant effect of economic growth on health expenditure, while also revealing a positively significant relationship between poor environmental quality and health expenditure. The empirical findings of this study suggest that of the three proxies of environmental quality carbon dioxide emission had the highest effect on healthcare expenditure while economic growth significantly increased health expenditure across the five African regions (North Africa, East Africa, Central Africa, West Africa and Southern Africa). The study concludes that health is a necessity good and a deterioration of the environmental quality increases health expenditure. Hence, there is a need to uphold the SDG clean energy policies that target the reduction of environmental pollution while striving for an inclusive and sustainable economic growth