Health Indices And Nigeria Economic Growth (An Econometric Analysis)

Project and Seminar Material for Economics

Health Indices And Nigeria Economic Growth (An Econometric Analysis)


Abstract


This research works examines the health indices and the Nigeria’s economic Growth.

In particular, the researcher is interested in knowing the type of correlation that exists between health indices and economic growth thereby, representing health indices such as infant mortality rate and life expectancy at birth. The researcher also represents the economic growth of Nigeria with Gross Domestic Product.

A series research made into the health sector shows that the infant mortality increased at an increasing rate from the year 1990 to 2000 but has been decreasing since then. This research study also reveals that there was a continuous decrease in life expectancy from the year 2000 to 2008 .According to this research study, these two health care indicators show that there is an inverse relationship between GDP and health indices in Nigeria.

Finally, this research study reveals that in order for the healthcare system to be a major determinant of the country’s GDP (Nigeria), some vital roles should be played by the government at all levels such as financing the health care sector adequately, health problems should be extended to health economist and not only to the hands of health professionals and ministers, includes the training of health economics in national policies among others.


Chapter One


1.0 Introduction

1.1 Background Of The Study

In recent decades, the Sub-Saharan Africa has attracted global attention as international institutions have come together in order to curb or combat the major problems facing it. From the facts above, it is clear that apart from the fact that these problems exist in Sub-Sahara Africa they also have the lowest response rate and this brings to play the role of institutions in the attainment of economic development via health. In order to ensure that growth and development takes place in an economy, economic stability and certainty have to be guaranteed in a society in order to attract investors and this can only be achieved in a society with good governance and political stability. It is now the role of institutions to direct the activities and transactions carried out by different players with respect to their economic, political and social environment if development is to take place. As Jack and Lewis (2009) in a view to investigate the determinants of health itself, particularly the evidence on the impact of public expenditure point out that in general there appears “to be growing evidence that the public policies only improve health when institutions are of sufficiently high quality, and that good institutions themselves are likely to have a more important direct effect on growth than growth through health”. 20 ‘Institutions in health care are important but under studied. The lack of sound institutions undermines health investments and leads to ambiguous evidence relationship between health care services and health status. Accepted indicators of health care performance such as hospital infection rates, utilization statistics, or surgery survival rates are rarely collected even when required, for lack of some combination of oversight, regulation, and enforcement.

This applies in middle income countries as well as poorer ones. Indirect indicators of poor performance that are increasingly relied on in the absence of more direct measures include provider absenteeism, lack of basic medical supplies and drugs, poor management of purchases, leakage of funds, and under-the-table payments by patients, all of which highlight the nature of the performance lapses that undermine effective service delivery’ (Lewis, 2006; Jack and Lewis, 2009). Institutions with regards to health play an important role in achieving Economic growth as if institutions are unable to function, public spending on health will not improve health talk more of raising Economic growth. Therefore more attention should be paid to upgrading Health care institutions. Health has been seen to have effects on economic development as it improves productivity and human capital.

Good health improves the ability and capacity to learn and work while chronic illness undermines current productivity and promises future outcomes in output. According to Spring (2005) ‘improvements in health have both level and growth effect on per capital income. Level effects from improved health results from increases in effective labour inputs. Improved health contributes to this in two ways: first by increasing the supply of labour inputs due to less time missed due to disease. Secondly by the increase in the efficiency in labour inputs due to improvements in the quality of labour when individuals are healthier. Growth rate occurs because a lower incidence of disease increases (the private and social) rates of return to human capital investments, which in turn leads to higher rates of economic growth”. Sorkin (1977); Rico et al. (2005) shows the various channels in developing nations through which economic development could be impacted through health. The gains from productivity and through 21 the improvement in the hours of work are the first way through which health could impact economic development. Also, the development of previously unsettled regions is made possible. Lastly, this could also be seen through the turnaround in people’s attitude through the improvement made in innovation and entrepreneurship. Good health plays an important role in the attainment of economic development.

Health is the ability to perform one’s roles or functions. It helps us develop what we are capable of doing to society at large.

Inadequate health contributed directly to redaction in productivity and loss of payment for the individuals, with disastrous consequences for the dependent class, The basic diagnostic point that good health is an integral part of development has therefore come take centre stage in development thinking; this point is due to the fact that only healthy people can earn income afford and seek medical care for themselves as well as their families, have better nutrition and experience more freedom to live healthier lives (Dr. Lius G. Bambo 2006).

It is pertinent to note that to sustain our global environment and improve the quality of living in our human settlements, we commit ourselves to sustainable patterns of production, consumption, transportation and settlement development pollution, prevention, respect for the carrying capacity of Ecosystem and the preservation of opportunities for future generations (U.N conference and human settlement ,HABIT ATII Istanbul, Turkey 1996).
In this respect there has been a growing in thrust to analyze the relationship between health and economic growth this notion was brought about by the world health organization (WHO) report on health (1999). Dr. Chris Mwrska (2005) comments of reducing poverty and achieving sustained economic growth.

From this argument ,world health organization (WHO) urge African government and their partner to design National development plan that could provide opportunities for innovative reform for health and poverty reduction within past war or crisis reconstruction and also in the emergence of new democracies ( Brundtland , 1998).
In its renewed health for all policy the organization stressed that in addition to developing sustainable health system all organization efforts to improve health require making central to development by combating poverty and aligning sectoral programme of heath(Lipson 1996,Lius et,aI1997).

As development paradigms move from a faces on economic growth to more concern for poverty and local ownership improvement in health, outcomes have gained recognition in programmme of national development and civil society participation identifies as the largest single factor in development (Wolfenson, 1999 .world Bank 2000) .The World health organization (WHO) has constituted a commission on macroeconomics and health (CMH) with the task of conducting the needed analysis of how health related to macroeconomics and development issues.


1.2 Statement Of The Problem

Available resources are not always reliable accurate, adequate credible to tackle the priority public health problem in Nigeria .These resources are not accurate and are inadequate to lay down value judgment about the health problems in Nigeria demographic data such as census ,health survey examples are census other demographic data health survey e.t.c. are unreliable.

However, it is estimated by the united Nations that about 20%of Africa’s population reside in Nigeria and that over 50% of African investment is in its most populous nation( Chinsmnan,1998) .In spite of substantial economic progress and social advancement in the past thirty years ,there is still much human suffering and setting a development agenda that meets the need of its citizenry in a cost effective and equitable way about 48.50/0 of the Nigeria population lives in absolute poverty (defined as earning less than S 1.00 per day ) with about 80% of the poor residing in the rural area (UNDP 1998) .The gross national product (GNP) has declined from S1.00 in 1980 to S260 in 1995 ,placing Nigeria among the 20 poorest countries in the world (UNDP 1998) .The quality of life indices recorded in 1980 was 38% in Nigeria ,the united Nation Department programme (UNDP) and human development index (HDI) for 2000 placed in Nigeria 151 of 174 countries assessed bagging behind Cameroon.

Gambia, Ghana and Zambia without her National and human resource. Health indices are crucial part of economy development, especially in the developing countries .Health indices combine changes in both quality of life (QOL) and life expectancy (LIFEPEC).Health indices such as quality of life and life expectancy, infant mortality rate (IMR), disability adjusted life expectancy (DALE), material mortality rate(MMR) death indicators or health indices of an economy are being provided solution to through three basic health sectors of the economy which are :secondary health care, primary health care and tertiary health care .All these sectors through their functions provides adequate measure to increase the labour force of the nation and invariably the level of production in the country . Therefore, it is necessary to appraise health indices in Nigeria as a important factors in her economic growth process.


1.3 Objectives Of The Study

This focus of this research work is to examine the type of correlation that exists between health indices and economic growth.

Specifically, the study intends:

  1. To determine how infant mortality affects economic growth.
  2. To determine how life expectancy affects economic growth.

1.4 Hypothesis Of The Study

The research hypotheses to be tested in this study are as follows:

  1. H0: There is no significant relationship between life expectancy and economic growth in Nigeria
    H₁: There is a significant relationship between life expectancy and economic growth in Nigeria.
  2. H0: There is no significant relationship between infant mortality and economic growth in Nigeria
    H₁: There is a significant relationship between infant mortality and economic growth in Nigeria.

1.5 Significance Of Study

The state of health in Nigeria is an issue being addressed; yet, progress made towards substantial improvement in health has had relatively low response. Therefore, this study is aimed at establishing the relationship that might possibly exist between health and economic growth in Nigeria, it will aid policy makers in recommending the policy geared towards increasing the likelihood of the chance of living through increased life expectancy as well as reducing the morbidity rate through the reduction of the prevalence of life threatening diseases as this will not only see that the role of health on economic growth in Nigeria is actualized but will also contribute in the direction of driving the MDGs (4, 5 & 6).


1.6 Definition Of Terms

The following terms used during the study are explained below:

1. Economic Growth

Economic Growth can be defined as a quantitative sustained increase in the per capita output or income of a country supplemented by an increase in labour force and capital.

2. Health

Health for the purpose of this study refers to a complete state of an individual’s wellbeing taking into consideration both the mortality and the morbidity aspect.

3. Life Expectancy

Life expectancy in this study captures the mortality aspect of health and it refers to the average length or number of years a newborn is expected to live given the prevailing mortality rate.

4. Morbidity

Morbidity can be defined as the presence or frequency of illness in an individual’s life time, that is it accounts for the quality of one’s life.


Chapter Five


Summary And Conclusions

Summary

In order to adequately comprehend and understand this topic, the research work was proficiently divided in to five chapters. In the first chapter, a general overview and background of the study was examined including the statement of the research problem, the research objectives, hypothesis among others. Also, a thorough review of existing literature on the role of health on economic growth in Sub-Saharan Africa and this consisted of the conceptual, theoretical and empirical issues. In chapter three, the theoretical foundation of this work which is the Schumpeterian theory of growth. Schumpeterian theory is an endogenous growth theory that attributed differences in growth rate between rich and poor countries to the rate of productivity growth and not rate of factors accumulation. The theory distinguished explicitly between physical and intellectual capital and also between saving, that causes growth in physical capital, and innovation, that causes growth in intellectual capital, which the first generation of endogenous growth theories lump together. The fourth chapter consist of the data analysis and presentation in which both the descriptive and econometric analysis was conducted. The summary of findings, economic interpretation of results and policy implications were examined. Lastly, the fifth chapter provides a conclusion to the study.


Conclusion

This study has revealed that there is a cointegrating relationship among GDP, gross capital formation and other measures of health status. The results further show that per capita GDP Granger cause gross capital formation and measures of human capital and vise versa, implying that a bi-directional relationship exists. The role and importance of per capital gross domestic product in human capital development cannot be overemphasized as a mechanism for effective allocation of fund to the health sector and ensure sustainable health status. Thus, this study investigated the long-run economic relationship between health and gross domestic product in Nigeria.
Using a time series data of five variables followed over 42 years, we have studied the stationarity and cointegration properties of health expenditure and GDP, life expectancy, infant mortality, and gross capita formation, ultimately measuring the long term impact of the identified exogenous variable on GDP. The Cointegration result confirms that health variable plays a very significant role in determining the long run economic growth. As all the health indicators have a significant impact on the long run economic growth. Our analysis indicates that GDP and most of its determinants are non-stationary, and that they are linked in the long-run.


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