[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/plo/pone00/0206808.html
   My bibliography  Save this article

The roles of preventive and curative health care in economic development

Author

Listed:
  • Fuhmei Wang
Abstract
Introduction: Both the preventive and curative healthcare provisions accumulate agents’ health stock and stimulate economies’ productivities. However, with limited medical resources, increases in preventive health expenditure crowd out curative expenditure, and vice versa, which in turn impairs the population’s health and deters economic growth. This research aims to provide a empirically rigorous test on the hypothesis that optimally allocating health expenditure between prevention and cures stimulates economic growth within different countries, especially developed countries, and investigates whether health services are luxury goods on the path of economic development. Methods: Based on OECD country experiences, this present study uses the system generalized method of moments (GMM) estimation method to examine the roles of preventive and curative healthcare services over the path of economic development and proves that preventive and curative health spending have non-linear effects on economic performance. Results: For growth maximization, the optimal share of preventive health expenditure to GDP is 0.44% with per capita GDP at US$40,465; the real share is 0.25% with per capita GDP at US$35,230. The optimal share of curative health expenditure to GDP is 10.96% with per capita GDP at US$41,816; the real share is 8.26% with per capita GDP at US$35,230. Accordingly, the estimated optimal provision of health services are currently underprovided. This research further estimates the effects of income on demand for care and shows that the income elasticities of preventive and curative health care are greater than unity. Health services are luxury goods. Conclusions: Economies with higher incomes demand such services more than those with lower incomes. The large positive effects of income on preventive care use exist.

Suggested Citation

  • Fuhmei Wang, 2018. "The roles of preventive and curative health care in economic development," PLOS ONE, Public Library of Science, vol. 13(11), pages 1-12, November.
    • Handle: RePEc:plo:pone00:0206808
    DOI: 10.1371/journal.pone.0206808
    as

    Download full text from publisher

    File URL: https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0206808
    Download Restriction: no
    File URL: https://journals.plos.org/plosone/article/file?id=10.1371/journal.pone.0206808&type=printable
    Download Restriction: no
    File URL: https://libkey.io/10.1371/journal.pone.0206808?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Robert G. King & Ross Levine, 1993. "Finance and Growth: Schumpeter Might Be Right," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 717-737.
    2. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    3. Joseph P. Newhouse, 1977. "Medical-Care Expenditure: A Cross-National Survey," Journal of Human Resources, University of Wisconsin Press, vol. 12(1), pages 115-125.
    4. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2007. "Enhanced routines for instrumental variables/GMM estimation and testing," CERT Discussion Papers 0706, Centre for Economic Reform and Transformation, Heriot Watt University.
    5. Wang, Kuan-Min, 2011. "Health care expenditure and economic growth: Quantile panel-type analysis," Economic Modelling, Elsevier, vol. 28(4), pages 1536-1549, July.
    6. Turnovsky, Stephen J. & Fisher, Walter H., 1995. "The composition of government expenditure and its consequences for macroeconomic performance," Journal of Economic Dynamics and Control, Elsevier, vol. 19(4), pages 747-786, May.
    7. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-255, March-Apr.
    8. Hitiris, Theo & Posnett, John, 1992. "The determinants and effects of health expenditure in developed countries," Journal of Health Economics, Elsevier, vol. 11(2), pages 173-181, August.
    9. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-963, September.
    10. Nicole Maestas & Kathleen J. Mullen & David Powell, 2023. "The Effect of Population Aging on Economic Growth, the Labor Force, and Productivity," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(2), pages 306-332, April.
    11. Fuhmei Wang & Jung-Der Wang & Yu-Xiu Huang, 2016. "Health expenditures spent for prevention, economic performance, and social welfare," Health Economics Review, Springer, vol. 6(1), pages 1-10, December.
    12. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2007. "Enhanced routines for instrumental variables/generalized method of moments estimation and testing," Stata Journal, StataCorp LP, vol. 7(4), pages 465-506, December.
    13. Dean Baker & J. Bradford Delong & Paul R. Krugman, 2005. "Asset Returns and Economic Growth," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 36(1), pages 289-330.
    14. Mullen, John K. & Williams, Martin, 1994. "Marginal tax rates and state economic growth," Regional Science and Urban Economics, Elsevier, vol. 24(6), pages 687-705, December.
    15. Roubini, Nouriel & Sala-i-Martin, Xavier, 1992. "Financial repression and economic growth," Journal of Development Economics, Elsevier, vol. 39(1), pages 5-30, July.
    16. Nicole Maestas & Kathleen J. Mullen & David Powell, 2016. "The Effect of Population Aging on Economic Growth, the Labor Force and Productivity," NBER Working Papers 22452, National Bureau of Economic Research, Inc.
    17. Gyimah-Brempong, Kwabena & Wilson, Mark, 2004. "Health human capital and economic growth in Sub-Saharan African and OECD countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 44(2), pages 296-320, May.
    18. Olsen, Karen M. & Dahl, Svenn-Åge, 2007. "Health differences between European countries," Social Science & Medicine, Elsevier, vol. 64(8), pages 1665-1678, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Agnieszka Strzelecka, 2021. "The Field of “Public Health” as a Component of Sustainable Development—Poland Compared to the European Union," Sustainability, MDPI, vol. 13(18), pages 1-20, September.
    2. Mathieu Juliot Mpabe Bodjongo, 2024. "How to increase acceptance of the COVID-19 vaccine among poor people in Africa?," International Journal of Health Economics and Management, Springer, vol. 24(2), pages 173-210, June.
    3. Hui Tang & Yun Chen & Rongjun Ao & Xue Shen & Guoning Shi, 2022. "Spatial–Temporal Characteristics and Driving Factors of the Coupling Coordination between Population Health and Economic Development in China," Sustainability, MDPI, vol. 14(17), pages 1-17, August.
    4. Bancalari, Antonella & Bernal, Pedro & Celhay, Pablo & Martinez, Sebastian & Sánchez, Maria Deni, 2023. "An Ounce of Prevention for a Pound of Cure: Efficiency of Community-Based Healthcare," IZA Discussion Papers 16350, Institute of Labor Economics (IZA).
    5. Bancalari, Antonella & Bernal, Pedro & Celhay, Pablo & Martinez, Sebastian & Sánchez, María Deni, 2024. "An Ounce of Prevention for a Pound of Cure: Basic Health Care and Efficiency in Health Systems," IDB Publications (Working Papers) 13433, Inter-American Development Bank.
    6. Viera Ivanková & Rastislav Kotulič & Jaroslav Gonos & Martin Rigelský, 2019. "Health Care Financing Systems and Their Effectiveness: An Empirical Study of OECD Countries," IJERPH, MDPI, vol. 16(20), pages 1-22, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fuhmei Wang & Jung-Der Wang, 2021. "The Determinants of Telehealth Provision: Empirical Evidence from OECD Countries," IJERPH, MDPI, vol. 18(16), pages 1-13, August.
    2. Gebregziabher, Fiseha & Niño-Zarazúa, Miguel, 2014. "Social spending and aggregate welfare in developing and transition economies," WIDER Working Paper Series 082, World Institute for Development Economic Research (UNU-WIDER).
    3. Stimpfle, Alexander & Stadelmann, David, 2015. "The Impact of Fundamental Development Factors on Different Income Groups: International Evidence," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113128, Verein für Socialpolitik / German Economic Association.
    4. Muhammad Arshad Khan & Muhammad Iftikhar Ul Husnain, 2019. "Is health care a luxury or necessity good? Evidence from Asian countries," International Journal of Health Economics and Management, Springer, vol. 19(2), pages 213-233, June.
    5. repec:dau:papers:123456789/7972 is not listed on IDEAS
    6. Fajeau, Maxime, 2021. "Too much finance or too many weak instruments?," International Economics, Elsevier, vol. 165(C), pages 14-36.
    7. Nadide Halıcı-Tülüce & İbrahim Doğan & Cüneyt Dumrul, 2016. "Is income relevant for health expenditure and economic growth nexus?," International Journal of Health Economics and Management, Springer, vol. 16(1), pages 23-49, March.
    8. Arusha Cooray & Friedrich Schneider, 2018. "Does corruption throw sand into or grease the wheels of financial sector development?," Public Choice, Springer, vol. 177(1), pages 111-133, October.
    9. Samargandi, Nahla & Fidrmuc, Jan & Ghosh, Sugata, 2015. "Is the Relationship Between Financial Development and Economic Growth Monotonic? Evidence from a Sample of Middle-Income Countries," World Development, Elsevier, vol. 68(C), pages 66-81.
    10. Robert Stewart & Murshed Chowdhury & Vaalmikki Arjoon, 2021. "Bank stability and economic growth: trade-offs or opportunities?," Empirical Economics, Springer, vol. 61(2), pages 827-853, August.
    11. Tomasz Rokicki & Aleksandra Perkowska & Marcin Ratajczak, 2020. "Differentiation in Healthcare Financing in EU Countries," Sustainability, MDPI, vol. 13(1), pages 1-17, December.
    12. Bruno Ćorić & Vladimir Šimić, 2021. "Economic disasters and aggregate investment," Empirical Economics, Springer, vol. 61(6), pages 3087-3124, December.
    13. Błażej Łyszczarz, 2018. "Determinanty wydatków na zdrowie w gospodarstwach domowych w Polsce," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 1, pages 137-157.
    14. Evžen Kočenda & Karen Poghosyan, 2018. "Export Sophistication: A Dynamic Panel Data Approach," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(12), pages 2799-2814, September.
    15. Baltagi, Badi H. & Moscone, Francesco, 2010. "Health care expenditure and income in the OECD reconsidered: Evidence from panel data," Economic Modelling, Elsevier, vol. 27(4), pages 804-811, July.
    16. Saten Kumar, 2013. "Systems GMM estimates of the health care spending and GDP relationship: a note," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(3), pages 503-506, June.
    17. Yongfu Huang, 2011. "Private investment and financial development in a globalized world," Empirical Economics, Springer, vol. 41(1), pages 43-56, August.
    18. Junaid Ahmed & Mazhar Mughal & Inmaculada Martínez‐Zarzoso, 2021. "Sending money home: Transaction cost and remittances to developing countries," The World Economy, Wiley Blackwell, vol. 44(8), pages 2433-2459, August.
    19. Aysit Tansel & Ceyhan Ozturk & Erkan Erdil, 2021. "The Impact of Body Mass Index on Growth, Schooling, Productivity, and Savings: A Cross-Country Study," Koç University-TUSIAD Economic Research Forum Working Papers 2118, Koc University-TUSIAD Economic Research Forum.
    20. Sylviane Guillaumont Jeanneney & Kangni Kpodar, 2006. "Développement financier, instabilité financière et croissance économique," Economie & Prévision, La Documentation Française, vol. 0(3), pages 87-111.
    21. Demetriades, Panicos O. & Hussein, Khaled A., 1996. "Does financial development cause economic growth? Time-series evidence from 16 countries," Journal of Development Economics, Elsevier, vol. 51(2), pages 387-411, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:plo:pone00:0206808. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: plosone (email available below). General contact details of provider: https://journals.plos.org/plosone/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.