Infant Mortality in Low- and Middle-income Countries: Does Government Health Spending Matter?

Abstract

The issue of whether government health spending improves health outcomes has been a matter of contention over the years. There have been calls for governments to reduce their financing role in the health sector since such funding do not produce better health. This article examines the effect of public (i.e., government) health expenditure on infant mortality, a proxy of health outcomes, in low- and middle-income countries. We use data from the World Bank’s World Development Indicators database and employ fixed effects estimation technique, with three-stage least squares as a robustness check. The data cover the period 1995–2014. We find that public health expenditure improves health outcomes significantly, as it reduces infant mortality. The results further show that rising income and access to safe water are some of the reasons for improved health outcomes in low- and middle-income countries. Based on these results and the expected redistributive impact of government spending, governments in low- and middle-income countries may consider increasing health spending for better healthcare systems and improved health.