ABSTRACT
Health financing has enjoyed significant academic research visibility in recent years and experts judge that this will continue for many coming decades. Accordingly, this study investigated the impact of health financing on economic development of Nigeria and Ghana. The specific objectives were to; ascertain the effect of health financing on real gross domestic product of Nigeria and Ghana, examine the influence of education financing on real gross domestic product of Nigeria and Ghana, determine the impact of per capita health on real gross domestic product of Nigeria and Ghana, assess the effect of health financing on school enrolment of Nigeria and Ghana, assess the effect of health financing on life expectancy of Nigeria and Ghana. In order to achieve these objectives, the study adopted data covering the period of 1986 – 2018, and utilized Panel Data regression analysis as the data analysis method incorporating Unit root test, and co-integration. Health financing (HFIN), Education Financing (EFIN), and Per Capita Health (PCAH) were the independent variables, while Real Gross Domestic Product (RGDP), School Enrolment (SCHE), and Life Expectancy (LEXP) were the dependent variables. The result reveals that the independent variables have mixed relationship with RGDP in both countries. This is a pointer to the fact that an increase in the level of healthcare financing in Nigeria and Ghana will bring about a level of productivity in the nations when all strategic indices are well considered. The study concludes that the mixed coefficients that exists among the health financing variable as it relates to economies of Nigeria and Ghana call for financial strategy adjustment in order to explore the potential growth virtues embedded in the health sector that are starved of fund, and therefore recommends that there is need for continuous financing into the health sector of the countries in order to achieve the desired significant effect necessary to boost economic productivity in the countries. Education financing from our study showed positive coefficient and significant effect. We advocate for increase in education financing as the variable sustained significance after incidental increment to 30 percent. Furthermore, the study advocate that health expenditure in the countries should consider the population size during implementation. Furthermore, the study advocate for the creation of a continuous literacy and research advancement by government in the nations that will enable smooth transfer of knowledge and promote innovations at various level of production in the countries. Finally, effective and efficient access to health care services, health infrastructure and enlightenment is advocated to address the issue of varying life expectancy in the countries.
TABLE OF CONTENTS
Title Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgments v
Table of Contents vi
List of Tables ix
List of Figures x
List of Appendices xi
Abstract xii
CHAPTER 1:
INTRODUCTION
1
1.1 Background
to the Study 1
1.2 Statement of the problem 5
1.3 Objectives of the study 8
1.4 Research questions 8
1.5 Research hypotheses 9
1.6 Significance of the study 9
1.7 Scope of the study 10
1.8
Limitations of the study 10
1.9 Operational
definition of terms 11
CHAPTER 2: REVIEW OF RELATED LITERATURE 14
2.1 Conceptual Framework 14
2.1.1 Conceptual review 15
2.1.2 Concept of health financing 15
2.1.3 Health capital 17
2.1.4 Importance of healthy society in a country 19
2.1.5 Economic welfare and health care awareness 22
2.1.6 Contribution of health sectors for past
decades 24
2.1.7 Economic impact of ‘cost of illness’ COI 26
2.1.8 Water, sanitation and hygiene 28
2.1.9 Health
situation analysis in Nigeria 30
2.1.9.1 Geographic, political and demographic features 30
2.1.9.2 Health situation analysis in Ghana 32
2.1.9.3 Geographic, political and
demographic features 32
2.1.9.4 Healthcare system in Ghana 33
2.1.9.5 Socio-economic features 34
2.1.9.6 Economic performance 34
2.1.9.7 Employment/unemployment 34
2.1.9.8 Poverty 35
2.1.9.9 Education 35
2.1.9.10
Water and sanitation 36
2.1.9.11
The environment 36
2.1.12
Major causes of the disease burden 37
2.1.13 Health financing in Nigeria and Ghana 38
2.1.14
Health information system (HIS) 41
2.1.15
Community-based health insurance 42
2.1.15.1
Weaknesses and strengths of community-based health scheme 43
2.1.15.2 Strengths
of community-based health scheme 44
2.1.15.3
Weaknesses of community-based health scheme 46
2.1.16 Relationship between health
and growth 50
2.2 Theoretical Framework 53
2.2.1 Exogenous growth theory 53
2.2.2 Health inequality theory 55
2.2.3 Grossman health theory 57
2.3 Empirical Review 59
2.4 Summary
of Related Literature 92
2.5 Gaps
in Literature 106
CHAPTER 3: METHODOLOGY 108
3.1 Research
Design 108
3.2 Area
of study 108
3.3 Population
of the study 109
3.4 Sources
of Data 109
3.5 Model
Specification 109
3.6 Operational Measures of Variables 113
3.7 Method
of Data Analysis 115
CHAPTER 4: DATA PRESENTATION, RESULTS AND DISCUSSION 119
4.1 Presentation of Data 119
4.2 Data analysis – Nigeria data 121
4.2.1 Data analysis – Ghana data 128
4.3 Panel Result 135
4.4 Hypothesis Testing 140
4.5 Discussion of Findings 144
CHAPTER
5: SUMMARY, CONCLUSION AND RECOMMENDATIONS 150
5.1 Summary
of Findings 150
5.2 Conclusion
152
5.3 Recommendations 153
5.4 Contribution to Knowledge 154
5.5 Suggestion for Further Study 140
References 156
Appendices
163
LIST OF TABLES
2.1: Summary of Related Literature 92
3.1:
Variables Operationalization 114
4.1:
Presentation of Data for Nigeria and Ghana 119
4.2: Descriptive Statistic – Nigeria 121
4.3: Summary
of Unit Root Tests Result 122
4.4A: Result for Johansen Co-integration Test 123
4.4B: Result for Johansen Co-integration Test 123
4.4C: Result for Johansen Co-integration Test 124
4.5A: OLS Regression Result 125
4.5B: OLS Regression Result 125
4.5C : OLS Regression
Result 126
4.6: Descriptive Statistics – Ghana 128
4.7: Summary
of Unit Root Tests Result 129
4.8A: Result for Johansen Co-integration Test 130
4.8B: Result for Johansen Co-integration Test 130
4.8C: Result for Johansen Co-integration Test 131
4.9A: OLS Regression Result 132
4.9B: OLS Regression Result 132
4.9C: OLS Regression Result 133
4.10:
Hausman Test Result 136
4.11A: Fixed Effects
Model 137
4.11.B: Fixed Effects
Model 137
4.11.C: Fixed Effect
Model 138
4.11.D: Fixed Effect
Model (Simulation) 138
4.12: Health financing
has no significant effect on real gross domestic
product
of Nigeria and Ghana 140
4.13:
Education financing has no significant influence on
real gross
domestic product of Nigeria and Ghana 141
4.14:
Per capita health has no significant impact on real
gross domestic
product
of Nigeria and Ghana 141
4.15:
The effect of health financing on school enrolment of
Nigeria and
Ghana
is not significant 142
4.16:
Health financing has no significant effect on life
expectancy of
Nigeria and Ghana 142
LIST
OF FIGURES
2.1: Connection between Health Financing, Health
status & Economic Development 14
2.2:
Nigeria Population Structure
31
2.3: Health Financing in Nigeria 39
2.4:
Health Financing in Ghana 40
APPENDICES
1:
Data for Nigeria and Ghana 163
2:
Descriptive statistics – Nigeria 166
3:
Unit root 167
4: Johansen Co-integration 176
5:
Granger causality 181
6:
OLS regression 182
7:
Ghana: Presentation of data 184
8:
Descriptive statistics – Ghana 185
9:
Unit root 186
10: Co-integration 195
11:
Granger Casualty 200
12:
OLS 221
13:
Panel 203
14:
Fixed 205
15:
Random 207
16:
Hausman 208
17:
Panel Descriptive 209
18:
Simulation 210
19:
Graph Nigeria and Ghana Health Financing 215
CHAPTER 1
INTRODUCTION
1.1 BACKGROUND
TO THE STUDY
Health financing has enjoyed significant academic research
visibility in recent years and experts judge that this will continue for many coming decades. This is a consequence of the
pressure being exerted on the
government of various nations by relevant
authorities regarding the sustainability of increased health financing (Hansen
and King, 2017). The World Health
Organization (WHO) defines health as a “state of complete physical, mental and
social well-being and not merely the absence of disease or infirmity.” Some of
the main featured of health are that it impacts society’s welfare, it
cannot be manufactured by people or households, it is non-transferable, it
cannot be traded and it is scarce (WHO, 2016). On the other hand health
financing involves the basic functions of collecting revenue, pooling
resources, and purchasing health goods and services (Bloom,
David and Jaypee, 2017).
The
OECD (2010) posits in a study that health
expenditures when compared to nation’s total expenditures and Gross Domestic
Product (GDP) has being on
the increase in some nations, while others are yet to
adjust to the reality of the relevance of healthcare to the economy, and
allocate sufficient fund to
the health sector. In developing economies like
Nigeria and Ghana, public health expenditures has experienced upsurge since the
millennium. In the year 2000, Nigeria as a country had a total health
expenditure of N15.2180 billion
which accounted for 3.29% of the total expenditure. This increased to N34.1984 billion and N90.245
billion in 2004 and 2009 respectively accounting only for 3.079% and 4.24% of
the country’s fiscal expenditure. In 2018, the country’s health expenditure stood
at N296.44 billion,
which accounted for only 5.22% of the total expenditure (CBN, 2018).
The situation is not significantly different in Ghana.
In the year 2009, Ghana had a total health expenditure of ȼ153.483
million which accounted for 1.86% of the total expenditure. This increased to ȼ752.809
million accounting only for 2.74% of the country’s fiscal expenditure. In 2018,
Ghana’s health expenditure stood at ȼ1.967428 billion, which accounted for only 3.43% of
the total expenditure (MFG, 2018). This uptrend in health financing and its low
percentage in the total expenditure of countries has been largely attributed to
continuous rise in the population (Bakare and
Olubokun, 2017). It is beneficial
to ask whether the increased funding in the sector is earning adequate
long-term social and economic rewards to the nation. Most countries of the
world have in the recent times witnessed progress in health as measured by increses in these health parameters. Socioeconomic changes through globalization are
likewise pressing factors that led to such crucial attention on health. It is
important that nations of the world must deal with it beacause it affects productivity and economic development.
Health sector services include the entire activities
that deal with identification and control of diseases or the publicizing,
protection and reinstatement of health. It involves public and private health
services. Thus, health service delivery designates the approach with which
involvements such as finance, workforce, equipment and medicine are combined to
enable the delivery of health intermediations (Adisah-Atta,
2017). Consequently, accessibility, treatment and quality
of services anchors on these fundamentals; on the deportments of services and
management, and on inducements prompting suppliers and consumers (WHO, 2016). Hence,
it is indisputable that healthy communities have notable
effects on economic activities of a nation since it is a fact that the longer
people live, the more productive they will be.
There is a bi-directional interaction between a
nation’s populace health status and its economic growth level and development as
reported by Kurt (2015). Sustaining a high level of growth and development
creates the atmosphere for enhanced nutrition and sicknesses treatment
opportunities with improved medical technology. Such a state enables better
health conditions and promotes percentage of healthy people in the nation.
Considering the fiscal expenditure on health, increased allocation of fund to
the health sector through its multiplier effect increases aggregate production
and demand. However, sick people are rather inefficient and serve as great
burden to their families and communities. This leads to reduction in production
and inhibits productive utilization of a nation’s infrastructure and investment
towards greater advancement (Temitope and Bola, 2013).
Having good health and longevity is an essential need
of human beings. Generally healthy individuals are more energetic, vibrant and
have more affective outlook of life. These characteristics are not only
translated into positive influence for social activities, but also affect the
economic growth and development. Recent global challenges such as
globalization, technological innovation, health issues and other socio-economic
reasons have led the national and international communities to highlight the
fundamental needs of society. Beside other human capital resources, health
financing is one of the important factors that can positively influence the
economy. Literature on Health financing is scanty when compared to other human
capital such as education, labour-training and production etc. Although these
are somehow interdependent, focusing on one of these human capital elements translates
the other. Many studies have been conducted on health financing in relation to
the investments on education, job training, labour productivity and importance
of healthy nutrition’s for human body. However, the basic ideas surrounding
these studies are their possible effects on economic growth as well as return on
investments in relation to health capital. The role of human health capital is
regarded crucial to sustainability of economic growth. As sustained growth
depends on considerable levels of human health, stocks of human capital
increases as a result of higher levels of health, better quality of education,
and new training and learning procedures. Education and health are considered
important indicators for a country economic growth and development, however
labour force with the lower levels of education and poor health status results
drives the economic growth in long run (OECD,
2015). Most of the developing countries are not capable of
maintaining a sustainable economic development. However it is evident that the
increase in investments on health implies higher levels of human capital.
Together these variables systematically lead to high levels of development. These
changes are the effect of increase in investments. A healthy skilled labour
force finds it much easier to innovate, use, create and adapt new technologies
(Yaqub, Ojapinwa and Yussuff, 2016).
Poor and developing countries have lower levels of
human health and find it more difficult to compete in developmental activities
and labour force participation with those nations which have comparatively more
developed human health capital resources. So in order for those poor economies
to come to developed countries levels of human capital they need to begin
converging their levels of human capital with those of richer nations (Swift,
2017).
Good health is an essential factor in well-being of
the society. As a result, improvements in health capital can correlate to
growth in economies (Matteo and Sunde, 2016). It seems rational assumption that good health
promotes higher levels of human capital and therefore in return has positive
impact on economic productivity of individuals and a country`s rate of economic
growth. Good health improves the workforce ability, reducing incapability, and
increases market and non-market performance of individuals and also affects the
days lost while being sick. Individuals of the society get more and more
opportunities to get enrolled for paid jobs and their productivity will be much
better compared to unhealthy workforce of other countries. Furthermore, better
health leads to improved levels of education by increasing level of education
and higher schooling performances. This is also an important factor,
considering education as one of the main drivers of resources allocation which
would otherwise be used for preventative treatments for health, thus it
substitutes the uses of health capital for negative externalities such as
poverty rate of society. An adequate understanding of health and increased wealth
accumulation is essential in order to comprehend the causal relationship
between these two aspects that promote the standard of living in of a society (Nyamwange,
2012).
1.2 STATEMENT OF THE PROBLEM
Since health capital plays an important role in
economic outcomes and health is an essential factor of human capital, health
also improves economic output. Many studies on micro level have investigated
the effect of health on wage rate with mixed results taking from the findings
of Okoroh, Essoun, Seddoh, Hobart, Joel, Dsane-Selby, and
Riviello (2018) and Mawuli and Alistair (2017). A closer view of the mixed finding from past scholars reveals that
most of the studies focus on developed nations with less literatures on the
relevance of health capital and financing on developing economies. Different
health indicators are used and range of different measures such as height,
weight and body mass index, and other measures that were based on individual
survey reports such as self- assessments regarding health status, whether these
individuals are suffering from any particular chronic illness. These surveys
conclude that healthy workers have lower chances to get chronic diseases and
they are active and the impact is understandable from their high productive
energy and earnings. However as always there were problems related to these
kinds of studies which are normally related to measurement errors capturing
individual’s health status, the heterogeneity of the variables and the diverse
feedback among them.
Health is acknowledged to be a critical factor that
drives welfare and sustained economic and social development. People rate
health as one of their highest priorities. Indeed Health has become as
important as any other economic and social concern, such as unemployment, low
wages and high cost of living. As Matteo and Sunde
(2016) noted the most basic human capabilities include leading
a long life, being knowledgeable and enjoying a decent standard of
living. Existence of health related issues distort many aspects of the economy,
and if not covered at a certain level can cause damages to
the economic empowerment of the country. A country losing its health capital
can imperciptibly create long as well as short-term gaps in the gross
domestic production in the country. Health financing has become widely
used in health and financial sector because it provides concepts and techniques
that can help relevant authorities to plan, allocate and manage health
resources in order to efficiently and equitably meet the health needs of the
population. Moreover, the evidence that can be generated using the discipline
of health financing can be useful in determining the amount of a country’s gross
domestic product that should be allocated to health sector. This has led to
increased funding by governments around the world.
In Nigeria, despite the increased government spending
on the health sector from N0.134124 billion in 1986 to N254.2300 billion in
2016, a thorough review of the increased expenditure when compared to RGDP pose
a great concern to policy makers and various stakeholders. In 1986 the health
expenditure percentage to RGDP was 0.07%, this grew to 0.22% by the year 2000,
while in 2018 the percent of health expenditure to RGDP is only 0.23%. The
Ghana government has also increased spending on health care services. However,
the increased expenditure when compared to RGDP is worrisome and need further
investigation. In 2009, the country’s health expenditure percentage to RGDP was
0.07%, this increased to 0.41% by the year 2013, while in 2018 the percent of
health expenditure to RGDP was only 0.49%. Efforts by the government to ensure
equitable provision of quality public health services have been hampered by
a host of factors. These factors include inadequate funding to cater for the
growing population; ineffective management of already available resources to
the health sector, supporting health care advances in curing diseases and
prolonging life expectancy (Bakare and Olubokun,
2017).
Health has been considered as an effective indicator of
economic development as acknowledged by WHO Commission of Health Department.
According to the Commission, ill health undermines economic developments and
exerts poverty. Investments in health are essential for economic growth and
should be a key component of national development strategies (Abdul-Azeez and
Zurina, 2015). They propose the idea for achieving the goals of health
improvements by focusing on health regulations in the least developed and poor
nations. In every culture the concept of health is stated in a context that
health is wealth in a more influential intellect as well. It is the basic need
of individuals as well as families, for whom health bring the ability for
personal development and economic wellbeing in the coming future. This study
therefore assesses the impact of health financing on developing economy
with particular reference to Nigeria and Ghana.
1.3 OBJECTIVES OF THE STUDY
The main objective of the study is to investigate the impact
of health financing on economic development of Nigeria and Ghana. The specific objectives are to;
i.
ascertain the
effect of health financing on real gross domestic product of Nigeria and Ghana.
ii.
examine the influence
of education financing on real gross domestic product of Nigeria and Ghana.
iii.
determine the
impact of per capita health on real gross domestic product of Nigeria and
Ghana.
iv.
assess the effect
of health financing on school enrolment of Nigeria and Ghana.
v.
assess the effect of
health financing on life expectancy of Nigeria and Ghana.
1.4 RESEARCH QUESTIONS
The following research questions were formulated to
guide the study;
i.
How has health
financing affected real gross domestic product of Nigeria and Ghana?
ii.
What are the
effects of education financing on real gross domestic product of Nigeria and
Ghana?
iii.
What are the effects
of per capita health on real gross domestic product of Nigeria and Ghana?
vi.
To what extent
does health financing effects school enrolment of Nigeria and Ghana?
vii.
What are the
effect of health financing on life expectancy of Nigeria and Ghana?
1.5 HYPOTHESES
Sequel
to the objectives of the study above, the following tentative statements stated
in null form were tested in the study;
HO1: Health financing has no significant effect on
real gross domestic product of Nigeria and Ghana.
HO2: Education financing has no significant influence on real
gross domestic product of Nigeria and Ghana.
HO3: Per capita health has no significant impact on real
gross domestic product of Nigeria and Ghana.
HO4: The effect of health financing on school enrolment of
Nigeria and Ghana is not significant.
HO5: Health financing has no significant effect on life
expectancy of Nigeria and Ghana.
1.6 SIGNIFICANCE OF THE STUDY
The beneficiaries from the study include Researchers,
Economics Analyst, Government etc.
Researchers
The findings of this study is significant and of great
assistance to scholars by adding to the number of existing literatures in health
finance, in so doing aid future research. It also provide insight to potential
researchers who wish to carryout studies relating to the role of health
financing on the development of transition economies.
Government
The findings of this study is useful to government as
well as policy makers by providing insight on the nature of the relationship
between health financing and developing economies, and serve as evidence on the
deterrents of health financing on economy.
Economic Analysts
This study is another explanation to economic analysts
on the heterogeneity that exist in various sectors of developing economies, and
possible actions taken by the affected economies in reducing or increasing such
uneven development. It guides this group in proper economic analysis with
respect to minimizing health financing risk.
Medical Practitioners
This study is an important source of information to medical
practitioners by providing empirical evidence of the state of health care
services in the countries, and the need for medical practitioners to provide
adequate care services for various stakeholders in the countries.
1.7 SCOPE OF THE STUDY
This
study examined health financing and
economic development of Nigeria and Ghana. The
study used a time series data covering the period of 33 years (1986 – 2018)
from Nigeria and Ghana in order to understand the trend in health financing
across the countries and provide empirical evidence over the long period. The
study data started from 1986 in order to capture the long term effects of
health financing in the two countries.
1.8 LIMITATIONS OF THE STUDY
The
study limitation was collection of data for analysis. Yet the researcher was
determined to take up the responsibility since the data used were secondary
data from bureau of statistics and the Central Bank Statistical bulletin of
Nigeria and Ministry of Finance website of Ghana and World Bank Data sites.
Another limitation envisaged
during the study was the level of heterogeneous result from past studies in
terms of uniformity. Other limitations include combining the research with
other socio-political activities in other to balance the researchers’
relationship with loved ones and also ensuring not to deter the quality of the
research.
1.9 OPERATIONAL DEFINITION OF
TERMS
The variables used in this study were
selected based on established theories, evidence from past studies, and
availability of data. The study focused to show the impact of health financing
on economic development, thereby making the health financing the independent
variable and economic development the dependent variable.
The dependent and independent
variables are describe below;
(i)
Real Gross Domestic Product (Dependent Variable)
Real Gross Domestic Product (RGDP) – It
is a total output of the country measured in naira. It is calculated with
considerations on depreciations and depletions or environmental factors into
consideration.
(ii)
Health Financing (Independent Variable)
Health
Financing (HFIN) – is the total public health spending by government, includes
recurrent and capital investments of government which accounts the proportion
of local budgets, grants and other external borrowings. The out-of-pocket
investment are also included in the estimation of health expenditures,
borrowings from non-governmental organizations and international agencies. It
covers the health provisions, activities of family planning, preventive or
curative health services and also nutrition activities. However it excludes water
and sanitation expenditures.
(iii)
Education Financing (Independent
Variable)
Educational Financing (EFIN) – Education
expenditure includes operating expenditures in education, current wages,
salaries but capital investments in equipment and buildings are excluded from
in the weighted average calculation.
(iv) Per
Capita Health (Independent Variable)
Per Capita Health (PCAH) – This is the ratio of the total health expenditure
on population of the country per head over the period of study. It is expected
that an increase in the value of Per Capita Health increase the economic
growth.
Per Capita Health =
(v)
School Enrolment (Dependent Variable)
School Enrolment (SCHE) – School
enrolment rate is
defined as the ratio of children of official school age who are enrolled in
school to the population of the corresponding official school age.
(vi)
Life Expectancy (Dependent Variable)
Life Expectancy (LEXP) – Life expectancy is a statistical measure of the average time an
organism is expected to live, based on the year of its birth, its current age,
and other demographic factors including biological
sex.
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