Health Care Expenditure and GDP in African Countries: Evidence from Semiparametric Estimation with Panel Data

Abstract

A large body of literature studies on the relationship between health care expenditure (HCE) and GDP have been analyzed using data intensively from developed countries, but little is known for other regions. This paper considers a semiparametric panel data analysis for the study of the relationship between per capita HCE and per capita GDP for 42 African countries over the period 1995–2009. We found that infant mortality rate per 1,000 live births has a negative effect on per capita HCE, while the proportion of the population aged 65 is statistically insignificant in African countries. Furthermore, we found that the income elasticity is not constant but varies with income level, and health care is a necessity rather than a luxury for African countries.