Determinants of Health Expenditures in ASEAN Region: Theory and Evidence

Abstract

The study of the nature of public welfare expenditure in healthcare has gained more attention recently. Many studies suggest that as countries are growing economically, becoming more urbanized and industrialized; their welfare expenditure has also increased. Others suggest that countries with higher proportion of older population tend to have larger welfare expenditure. This article uses data on Association of Southeast Asian Nations (ASEAN) countries to examine the factors that are claimed to have effect on public welfare expenditure, particularly on healthcare. It is conducted from a public policy’s perspective. Using the two-stage least squares regression, this study finds that health expenditures as percentage of GDP are not significantly determined by the number of elderly. They increase significantly with industrialization and foreign direct investment. This study also finds that economy and urbanization grow faster than health expenditures.