Volume 21, Issue 82 (11-2021)
refahj 2021, 21(82): 9-43 |
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shahraki M, ghaderi S. (2021). The Relationship Between Public Health Expenditures and the Quality of Democracy on Social Welfare in Countries with High Human Development Index. refahj. 21(82), 9-43.
URL: http://refahj.uswr.ac.ir/article-1-3884-en.html
URL: http://refahj.uswr.ac.ir/article-1-3884-en.html
Keywords: Public Health Expenditures, Democracy, Social Welfare, Human Development Index, Cross-Section Dependence
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Introduction: Welfare status is one of the factors that differentiate between countries. Social welfare has become a fundamental goal of development programs in various communities (Shahabadi & Arghand, 2019). Public health expenditures are also very important in increasing health infrastructure and public access to medical care and services. Improving and upgrading health technologies and training specialized personnel also depends on public spending (Shahraki, 2019). Considering the effects of health expenditures on improving health status and the importance of health in promoting human development index and consequently increasing economic growth and social welfare, as well as the impact of institutional and social factors on human development and welfare status, the main purpose of this study was to investigate the impact of public health expenditures and the quality of democracy on social welfare in the countries with high human development index (including Iran), and answers these questions; can increasing health spending alone improve the welfare situation in countries with high human development index? What is the impact of social factors such as bureaucracy on the welfare situation in these countries? And finally, can the state of democracy in these countries increase the efficiency of health expenditures in improving the welfare of society?
Method: This descriptive-analytical and applied study was performed by Panel data with Panel-Corrected Standard Errors (PCSE) estimator for the years 2000-2019 in 2021. The statistical population comprised 39 countries with a high human development index. Per capita public health expenditures, GDP per capita, openness index, age dependency ratio of World Bank databases (world bank, 2021), democracy indicators from The International Country Risk Guide (ICRG, 2021) and HDI and IHDI data were extracted from the United Nations Database (United Nations Development Program, 2021). The required models and tests were estimated in Stata 16 software. The following models were estimated based on theoretical foundations and previous studies.
Model 1: HDIit=αit+PHEXPit+Dit+ +LNGDPit+LNOPENESSit+AGEit+DPHEXPit+εit
Model 2: IHDIit=αit+PHEXPit+Dit+DPHEXPit+εit
HDIit: Human Development Index; which is between zero and one. This is the geometric mean of the three indicators of life expectancy, education, and gross national income.
IHDIit: Inequality-adjusted Human Development Index; this index is the geometric mean of the three-dimension indices adjusted for inequality and between zero and one.
PHEXPit: Public health expenditures to GDP (as a percentage)
D_it: Democracy Index; this index shows the government’s response to the people and has a value between zero and six. The value of six represents the highest level of democracy.
LNGDPit: The natural logarithm of GDP per capita in purchasing power parity
LNOPENESSit: Openness, Natural logarithm of total imports and exports to GDP
AGEit: Age dependency ratio, the ratio of people under 15 and over 64 to people aged 15-64
DPHEXPit: The multiply of public health expenditures and democracy index
Before estimating the above model, the cross-sectional dependence, stationary of the variables and the co-integration between the model variables must be determined. The CD test of Pesaran (Pesaran, 2007) was used to check the cross-sectional dependence. In this test, the null hypothesis is no cross-sectional dependence (Pesaran, 2007). To ensure the absence of spurious regression coefficients, stationary tests are required. For this, due to the cross-sectional dependence, the panel unit root test of Pesaran (CIPS test) was also used; the Westerlund test (Westerlund, 2007) was used to examine the co-integration between variables due to cross-sectional dependence.
Finding: The mean of human development index for all the sample countries during the period was 0.70 ± 0.04, that of Iran was 0.73 ± 0.04, and the mean of Inequality-adjusted Human Development Index for all sample the countries was 0.58 ± 0.06 and for Iran it was equal to 0.56 ± 0.08. The CD test of Pesaran was used to examine cross-sectional dependence. For all variables in the models, the Pesaran’s CD statistic was greater than critical values, and the null hypothesis of no cross-sectional dependence was rejected, so the variables of both models were cross-sectional dependence. To check the stationarity of the variables with cross-sectional dependence, the panel unit root test of Pesaran with cross-sectional dependence (CIPS) was used. The variables of Human Development Index, Inequality-adjusted Human Development Index, and public health expenditures, considering that the value of CIPS statistic was greater than the critical value at the significance level of 5%, did not have a unit root and were stationary. But other variables had a unit root. Since the variables of both models had different degrees of integration, so it was necessary to examine the co-integration between the variables of both models, which used the Westerlund co-integration test. The results showed that there was a co-integration relationship between model (1) and model (2) variables in the long run. The results of panel models with Panel-Corrected Standard Errors (PCSE) estimator were presented in the below table.
The results of panel models with Panel-Corrected Standard Errors (PCSE) estimator
The variables of public health expenditures to GDP, GDP logarithm, Openness and democracy index had a positive effect of 0.26, 9.02, 0.08, and 0.17% on the human development index, respectively. Also, the variables of public health expenditures to GDP, Democracy index and the multiply of public health expenditures to GDP and democracy index had a positive effect of 0.34, 0.09, and 0.15% on the Inequality-adjusted Human Development Index, respectively.
Discussion: Inequality in human development in Iran was higher than other countries with high human development index, and public health expenditures and the quality of democracy had a positive effect on social welfare. Improving the quality of democracy also increased the efficiency of public health spending on social welfare; therefore, policies to increase public health expenditures are proposed in order to invest more in infrastructure and increase the level of health services in different regions to eliminate inequality, improve and upgrade health technologies that depend on public expenditures. It is also proposed to increase government transparency and accountability to the people in order to increase social welfare and increase the efficiency of health expenditures.
Ethical Consideration:
Authors’ contributions
All authors have made substantial contributions to this study.
Funding
This study was not funded.
Conflicts of interest
The authors declared no conflict of interest.
Acknowledgments
We would like to thank all those who contributed to this study.
Introduction: Welfare status is one of the factors that differentiate between countries. Social welfare has become a fundamental goal of development programs in various communities (Shahabadi & Arghand, 2019). Public health expenditures are also very important in increasing health infrastructure and public access to medical care and services. Improving and upgrading health technologies and training specialized personnel also depends on public spending (Shahraki, 2019). Considering the effects of health expenditures on improving health status and the importance of health in promoting human development index and consequently increasing economic growth and social welfare, as well as the impact of institutional and social factors on human development and welfare status, the main purpose of this study was to investigate the impact of public health expenditures and the quality of democracy on social welfare in the countries with high human development index (including Iran), and answers these questions; can increasing health spending alone improve the welfare situation in countries with high human development index? What is the impact of social factors such as bureaucracy on the welfare situation in these countries? And finally, can the state of democracy in these countries increase the efficiency of health expenditures in improving the welfare of society?
Method: This descriptive-analytical and applied study was performed by Panel data with Panel-Corrected Standard Errors (PCSE) estimator for the years 2000-2019 in 2021. The statistical population comprised 39 countries with a high human development index. Per capita public health expenditures, GDP per capita, openness index, age dependency ratio of World Bank databases (world bank, 2021), democracy indicators from The International Country Risk Guide (ICRG, 2021) and HDI and IHDI data were extracted from the United Nations Database (United Nations Development Program, 2021). The required models and tests were estimated in Stata 16 software. The following models were estimated based on theoretical foundations and previous studies.
Model 1: HDIit=αit+PHEXPit+Dit+ +LNGDPit+LNOPENESSit+AGEit+DPHEXPit+εit
Model 2: IHDIit=αit+PHEXPit+Dit+DPHEXPit+εit
HDIit: Human Development Index; which is between zero and one. This is the geometric mean of the three indicators of life expectancy, education, and gross national income.
IHDIit: Inequality-adjusted Human Development Index; this index is the geometric mean of the three-dimension indices adjusted for inequality and between zero and one.
PHEXPit: Public health expenditures to GDP (as a percentage)
D_it: Democracy Index; this index shows the government’s response to the people and has a value between zero and six. The value of six represents the highest level of democracy.
LNGDPit: The natural logarithm of GDP per capita in purchasing power parity
LNOPENESSit: Openness, Natural logarithm of total imports and exports to GDP
AGEit: Age dependency ratio, the ratio of people under 15 and over 64 to people aged 15-64
DPHEXPit: The multiply of public health expenditures and democracy index
Before estimating the above model, the cross-sectional dependence, stationary of the variables and the co-integration between the model variables must be determined. The CD test of Pesaran (Pesaran, 2007) was used to check the cross-sectional dependence. In this test, the null hypothesis is no cross-sectional dependence (Pesaran, 2007). To ensure the absence of spurious regression coefficients, stationary tests are required. For this, due to the cross-sectional dependence, the panel unit root test of Pesaran (CIPS test) was also used; the Westerlund test (Westerlund, 2007) was used to examine the co-integration between variables due to cross-sectional dependence.
Finding: The mean of human development index for all the sample countries during the period was 0.70 ± 0.04, that of Iran was 0.73 ± 0.04, and the mean of Inequality-adjusted Human Development Index for all sample the countries was 0.58 ± 0.06 and for Iran it was equal to 0.56 ± 0.08. The CD test of Pesaran was used to examine cross-sectional dependence. For all variables in the models, the Pesaran’s CD statistic was greater than critical values, and the null hypothesis of no cross-sectional dependence was rejected, so the variables of both models were cross-sectional dependence. To check the stationarity of the variables with cross-sectional dependence, the panel unit root test of Pesaran with cross-sectional dependence (CIPS) was used. The variables of Human Development Index, Inequality-adjusted Human Development Index, and public health expenditures, considering that the value of CIPS statistic was greater than the critical value at the significance level of 5%, did not have a unit root and were stationary. But other variables had a unit root. Since the variables of both models had different degrees of integration, so it was necessary to examine the co-integration between the variables of both models, which used the Westerlund co-integration test. The results showed that there was a co-integration relationship between model (1) and model (2) variables in the long run. The results of panel models with Panel-Corrected Standard Errors (PCSE) estimator were presented in the below table.
The results of panel models with Panel-Corrected Standard Errors (PCSE) estimator
| Model (2), IHDI: dependent variable | Model (1), HDI: dependent variable | |||
| p value | Coefficients | p value | Coefficients | Variables |
| 02.0 | 00342.0 | 08.0 | 0.00265 | Public health expenditures to GDP |
| 0.00 | 0.09026 | GDP per capita (natural logarithm) | ||
| 0.06 | 0.0008 | Openness | ||
| 0.00 | 0.00160- | Age dependency ratio | ||
| 0.63 | 0.00092 | 0.04 | 0.00171 | Democracy Index |
| 0.00 | 0.00151 | 0.61 | 0.00018 | The multiply of public health expenditures and democracy index |
| 0.00 | 0.55413 | 0.07 | 0.05133- | Constant |
The variables of public health expenditures to GDP, GDP logarithm, Openness and democracy index had a positive effect of 0.26, 9.02, 0.08, and 0.17% on the human development index, respectively. Also, the variables of public health expenditures to GDP, Democracy index and the multiply of public health expenditures to GDP and democracy index had a positive effect of 0.34, 0.09, and 0.15% on the Inequality-adjusted Human Development Index, respectively.
Discussion: Inequality in human development in Iran was higher than other countries with high human development index, and public health expenditures and the quality of democracy had a positive effect on social welfare. Improving the quality of democracy also increased the efficiency of public health spending on social welfare; therefore, policies to increase public health expenditures are proposed in order to invest more in infrastructure and increase the level of health services in different regions to eliminate inequality, improve and upgrade health technologies that depend on public expenditures. It is also proposed to increase government transparency and accountability to the people in order to increase social welfare and increase the efficiency of health expenditures.
Ethical Consideration:
Authors’ contributions
All authors have made substantial contributions to this study.
Funding
This study was not funded.
Conflicts of interest
The authors declared no conflict of interest.
Acknowledgments
We would like to thank all those who contributed to this study.
Type of Study: orginal |
Received: 2021/05/3 | Accepted: 2021/09/8 | Published: 2021/11/23
Received: 2021/05/3 | Accepted: 2021/09/8 | Published: 2021/11/23
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