Does Health Investment Matter for Productivity Growth in Sub-Saharan Africa? Empirical Insights from Income and Regional Economic Grouping Perspectives

This study investigates whether the investment in the health sector matters for achieving sustainable growth via the Dumitrescu-Hurlin heterogeneous panel non-granger causality test as well as the dynamic panel threshold model for the panel of twenty-six Sub-Sahara African countries. We report evidence of a bidirectional causalilty between health investment and productivity growth in the panel of SSA and find that investing a substantial part of GDP (about 7.96%) into the health sector is necessary to ensure growth of productivity level in SSA. When we control heterogeneity in our sample using the regional economic grouping, and World Bank income classification, we report unidirectional causality across the panels and variations in the estimated threshold with higher values for all groups except ECOWAS with 5.82%. Above the threshold level, health investment has positive effects on productivity growth for all the groups. We report significant findings that are instructive to policymaking and future research