Health Expenditure and Economic Growth in Nigeria. The Granger Causality Approach

Abstract

The study investigated the relationship between health expenditure and economic growth in Nigeria. The approaches employed in the analyses are that of Unit root, Co-integration, Error Correction Mechanism, Ordinary Least Square method and the Granger causality Approach. The study’s result indicates that there was a long run relationship amongst the variables under investigations thus necessitating the need for the application and conduct of the short-run analysis. The ECM result also confirms a short run link with a speed of adjustment of about 75 per cent yearly. This means that the speed of adjustment is 75 from the long equilibrium to its short run equilibrium. The stability test carried out revealed that the model is stable over time from 1980- 2024. The empirical findings from the study displays that health expenditure allocations and economic growth should be enhanced to improve the health sector so as to achieve better health status in the country. The 2 R is 0.617125 or 61 and the unit root result indicates that variables are integrated of order 1(1) fostering the need for a Co-integration test. The Co-integration test reveals a long run relationship among the variables and findings from the study indicates that agricultural sector output. capital health expenditure, capital education expenditure, gross capital formation, number of infant deaths, recurrent education expenditure are found to be statistically significant at five per cent level of significance except recurrent health expenditure. On the basis of the findings, we recommend that government should maintain the existing health care centres and build more hospital in the country. Finally, government should make funds available moderately to the health sector to improve the health sector.