Economic Growth and Health Expenditure Analysis for Turkey: Evidence from Time Series

Abstract

This study aims to investigate the effects of health expenditure on economic growth in Turkey. For this purpose, time series data of Turkey over the period 1975–2018 were evaluated. Moreover, household consumption, life expectancy at birth, trade, and foreign direct investments were added as control variables. Cointegration analysis was performed to test whether all variables are cointegrated in the long term. Causality test was successfully employed to investigate the relationship between health expenditure and economic growth in the short term. The achieved results exhibited that Johansen Cointegration test results suggest the existence of cointegration among all variables in the long term. In addition, the Granger causality test results indicate unidirectional causality from health expenditure to economic growth in the short term. Existence of a long-term relationship among related variables and a short-term relationship between health expenditure and economic growth displays the importance of investments on health care services in Turkey. Therefore, investments in the health sector should be encouraged and the share allocated by the government for health expenditures from the budget should be increased in Turkey.