The Impacts of Corruption on the Efficacy of Public Expenditure on Health: Evidence from Bangladesh
Proceedings of the 2nd International Conference on Sustainable Development, Dhaka, Bangladesh. ISBN: 978-98434-4755-5
9 Pages Posted: 5 Nov 2018
Date Written: 2018
The importance of health expenditure has gone on to becoming a crucial sector of public investment irrespective of the economic status of a nation. The prime importance of sustainable healthcare has also been acknowledged in the United Nations’ 2030 Sustainable Development Agenda in which SDG 3 particularly stresses on ensuring global healthy lives and promoting well-being for all at all ages. However, good governance is a key prerequisite when it comes to the overall attainment of the Sustainable Development Goals. Lack of good governance is a concern for the Least Developed Countries (LDCs) in particular to which Bangladesh, being the largest LDC in the world, is no exception. More precisely, corruption is believed to be the main attribute to the poor governance scenario in Bangladesh. Thus, the aim of this paper is to empirically investigate the impacts of corruption on the efficacy of government expenditure on health in order to understand the key importance of ensuring good governance in the economy. Against this backdrop, this paper incorporates annual time series data stemming across 1993 to 2016 in context of the Bangladesh economy and considers a set of linear regression models in which some of the crucial health indicators, as mentioned under the SDG 3, are expressed as separate functions of corruption, public health sector allocation and other control variables. As part of the methodology, this paper resorts to the use of Dynamic Ordinary Least Squares (DOLS) and Fully Modified Ordinary Least Squares (FMOLS) regression techniques to probe into the nexus engulfing the state of governance and health outcomes in Bangladesh. In addition, Granger causality test and Vector Error Correction Model (VECM) approach are also tapped to conclude on the causal association as well. In light of the estimated results, it can be concluded that most of the findings corroborate to the a priori hypotheses which were built in light of the conventional economic literature. Moreover, it is also found that corruption shrinks the efficacy of public health expenditure with respect to achieving the desired health outcomes. These imply that good governance attributes to effective and efficient public service deliveries, especially in relevance to the health sector. Thus, promoting good governance within the economy can eventually lead to attainment of health sustainability and can also contribute to the achievement of the other SDGs as well.
Keywords: corruption, health, public expenditure, Bangladesh, SDG
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