Unraveling the Nexus : Exploring the Impact of Healthcare Expenditure on Economic Growth in South Asian Nations using a Panel ARDL Approach

This study delves into the relationship between healthcare expenditure and economic growth in South Asian countries through a Panel ARDL analysis. Examining the data from 2003 to 2019, the study reveals intriguing insights. The long-run equation demonstrates a positive correlation between total health expenditure and GDP per capita growth, underscoring healthcare investments' potential positive spillover effects on economic growth. However, it also highlights a cautionary note as out-of-pocket health expenditure displays a negative relationship with GDP per capita growth, indicating that increased individual spending on healthcare can impede economic growth. To address this issue, policymakers should adopt measures to alleviate the financial burden of healthcare on individuals. Implementing strategies such as increasing public healthcare expenditure and introducing health insurance schemes can play a vital role in achieving this goal. By reducing out-of-pocket expenses and enhancing access to healthcare services, policymakers can both improve public health outcomes and stimulate economic growth. When examining the short-run equation, policymakers find that out-of-pocket and domestic private health expenditures positively impact GDP per capita growth, with statistical significance. However, it is important to note that the short-run equation alone may not provide a comprehensive understanding of the complex relationship between health expenditure and economic growth. Therefore, policymakers should primarily rely on the findings of the long-run equation when formulating policies to promote healthcare investments and ensure sustainable economic growth. By emphasizing long-term strategies prioritizing healthcare spending and recognizing its positive effects on economic growth, policymakers can effectively allocate resources and cultivate a healthier and more prosperous society. This study's findings contribute to the ongoing discourse on the intricate linkages between healthcare expenditure and economic development, providing valuable insights for policymakers in South Asian countries and beyond