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Bahrami Nia E, Shamsollahi R, Izadi S H, Tavakoli Komkoui F. Investigating the Direct and Interactive Impact of Government Health Expenditure and Institutional Quality on Iran's Economic Growth. EBHPME 2025; 9 (1)
URL: http://jebhpme.ssu.ac.ir/article-1-528-en.html
URL: http://jebhpme.ssu.ac.ir/article-1-528-en.html
Department of Economics, Payame Noor University, Tehran, Iran , e_bahraminia@pnu.ac.ir
Abstract: (85 Views)
Background: Health expenditure is crucial for strengthening human capital, which stimulates economic growth through technological progress and labor productivity. In Iran, health expenditure includes maintaining health and well-being of the workforce, along with the expansion of public and higher education, which impacts economic growth and development. The aim of this study is to examine the direct and interactive effects of health expenditure and institutional quality on Iran's economic growth.
Method: This study examines the short-run and long-run impacts of public healthcare expenditure on and institutional quality on Iran's economic growth during the period 2000-2022 are investigated using the autoregressive distribution lag (ARDL) method.
Results: The findings demonstrate that enhanced institutional quality has significantly contributed to Iran's economic growth during the study period. While health expenditure alone exhibited no statistically significant effect on economic growth, the interaction term between health spending and institutional quality yielded a positive and significant coefficient. This suggests that health investments foster economic growth only when coupled with robust institutional frameworks, highlighting the conditional role of governance in mediating health-economic outcomes. The results also demonstrated that in the period studied, household consumption expenditure, Trade openness levels and labor force exerted a statistically significant positive influence on Iran's economic growth trajectory.
Conclusion: Considering the results of this study, which indicate a positive interactive effect of institutional quality on the relationship between health expenditure and economic growth, it is recommended to Iranian economic policymakers to plan to improve institutional quality indicators. In order for government health expenditure to contribute to economic growth, it is essential that resources be allocated effectively and efficiently. Educational and health policies should be designed in a way that not only they do not have negative effects in the short term, but also help to improve the quality of the workforce and promote public health in the long- term.
Method: This study examines the short-run and long-run impacts of public healthcare expenditure on and institutional quality on Iran's economic growth during the period 2000-2022 are investigated using the autoregressive distribution lag (ARDL) method.
Results: The findings demonstrate that enhanced institutional quality has significantly contributed to Iran's economic growth during the study period. While health expenditure alone exhibited no statistically significant effect on economic growth, the interaction term between health spending and institutional quality yielded a positive and significant coefficient. This suggests that health investments foster economic growth only when coupled with robust institutional frameworks, highlighting the conditional role of governance in mediating health-economic outcomes. The results also demonstrated that in the period studied, household consumption expenditure, Trade openness levels and labor force exerted a statistically significant positive influence on Iran's economic growth trajectory.
Conclusion: Considering the results of this study, which indicate a positive interactive effect of institutional quality on the relationship between health expenditure and economic growth, it is recommended to Iranian economic policymakers to plan to improve institutional quality indicators. In order for government health expenditure to contribute to economic growth, it is essential that resources be allocated effectively and efficiently. Educational and health policies should be designed in a way that not only they do not have negative effects in the short term, but also help to improve the quality of the workforce and promote public health in the long- term.
Type of Study: Original article |
Subject:
Health Economics
Received: 2025/03/15 | Accepted: 2025/02/22 | Published: 2025/02/22
Received: 2025/03/15 | Accepted: 2025/02/22 | Published: 2025/02/22
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