The Economics of Health in India – A Concept Revisited Using Granger Causality Test
Review of Business and Technology Research, Vol. 2, No. 1, 2009, pp. 1-7. ISSN 1941-9414
7 Pages Posted: 28 Jan 2014
Date Written: December 22, 2009
There had been a number of studies for various countries that stated the impact of economic growth on health and the growth of health care sector on economic productivity. The paper revisits this concept for India -- which lacks such studies, using a Granger Causality Test (GCT). The study was done using per capita GDP growth rate, Government expenditure on health and medical services as a percentage of total budgetary expenditure as variables representing economic growth; while infant mortality rate, immunization of children against diphtheria, pertussia, tetanus (DPT) and measles and life expectancy at birth as proxy variables for growth of health facilities in the country for the period ranging from 1985 to 2007. It was found that India, which used to be a low-income country in 1980s, was having severe shortage of health facilities. The annual growth rate of population for the whole decade was over 2%. The life expectancy was below 60 years, infant mortality rate was over 90 per 1000 live births and only 40% children between the age of 12 to 23 months were immunized against the deadly diseases of DPT and measles. The health sector along with economic growth had shown a significant improvement in 1990’s and the new millennium. The GCT shows unidirectional causation between per capita GDP growth rate and Immunization of children against DPT & measles with economic growth causing the health. On the other hand infant mortality is significantly causing GDP per capita growth rate, showing the effect of health on economic productivity. But this rate of infant mortality shows no causation with government expenditure at 3 lags. The economic variables are significantly improving the life expectancy at birth, while life expectancy is showing bidirectional causality with per capita GDP growth rate only.
Keywords: Economic Growth, Health, Granger Causality, India
JEL Classification: I15, C59
Suggested Citation: Suggested Citation