Impact of Health Indices on Economic Growth: An Empirical Analysis of Regional Differences in Africa

Abstract

Background: As a component of human capital, health has been acknowledged to play a significant role in the development process of any economy. Improved health status enhances the capacity and strength of the labour force thereby raising their work participation and productivity. This study investigated the impact of health indices proxied by life expectancy, mortality rate, and fertility rate on economic growth in Africa taking regional differences into account.
Method: The study covered 33 African countries which were selected based on data availability spanning from 1990 to 2017. Panel data estimation techniques in form of fixed effect and random effect models were employed. Also, to account for the regional differences in the impact of health indices on economic growth, regional dummy variables, and their interaction with the variables of health indices were included in the models.
Results: The random effect estimates revealed that the coefficients of the interaction terms are statistically significant indicating the existence of differences in the impact of health indices on economic growth across the regions. Specifically, life expectancy contributes positively and more effectively to the economic growth of Western Africa when compared to the Southern and Central African regions, while the reverse is the case in the Eastern African region. The mortality rate has a more negative effect on the economic growth of Eastern Africa followed by Central Africa and then Northern Africa. Finally, the fertility rate had a more negative impact on economic growth in Southern Africa, followed by Western Africa, Central Africa, and the Eastern African region while the effect is positive in Northern Africa.
Conclusion: To bridge the identified regional differences, we recommend that governments of the selected regional countries should pursue strong health policies and programs to create preconditions for boosting the levels of health indices for increasing economic growth and development. This can be in form of increasing access to quality education, health services, and other social amenities by adopting the “Free-Service-For-All” approach particularly for women and children who are more vulnerable. Equally, there should be rigorous commitment to creating more job opportunities particularly through Public-Private-Partnership (PPP). Otherwise, improvements in health status accompanied by high unemployment will render the former to be ineffective in determining economic growth.