Abstract:

Health expenditure consists of all expenditures or costs for medical care, prevention, promotion, rehabilitation, community health activities, health administration and regulation and capital formation with the predominant objective of improving health in a country or region. According to WHO (2015), globally in 2006, expenditure on health was about 8.7% of gross domestic product, with the highest level in the Americas at 12.8% and the lowest in the South-East Asia Region at 3.4%. This translates to about US$ 716 per capita on the average but there is tremendous variation ranging from a very low US$ 31 per capita in the South-East Asia Region to a high of US$ 2636 per capita in the Americas. This paper intends to shows that health expenditure is a fundamental determinant of economic growth of every nation and that increasing expenditure on health leads to higher growth rates. Cameroon should therefore endeavor to meet and surpass the target of the Abuja declaration of 2001. One possible measure that could be taken to raise funds to meet this target could be by increasing for examples taxes on products such as cigarettes and other products of ostentation and rechanneling the extra revenue generated to investment in healthcare. One of the important drawbacks to funding to Cameroon is poor governance, thus measures to assure a fluid target based expenditure is imperative. In countries where poor governance is alarming, as the World Bank states, increasing public spending both from external donors and the government does not necessarily lead to the desired development outcomes. (WHO, 2013) Performance based financing can be an important mechanism that potential donors and government agencies can use. It is also believed to increase transparency and accountability in achieving targets. (Meessen, Hercot, Noirhomme, Ridde, Tibouti, Tashobya et al. 2011) Meessen et al. also argues that it improves the allocative efficiency of resources especially in low-income developing countries like Cameroon where resources are quite limited. Thus an efficient financing mechanism with greater emphasis on the processes leading to the performance
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goal is then necessary and imperative. This paper attempts just to show the linkages between increasing health care expenditures and economic growth.

Key words: Economic growth, Health expenditures, Cameroon, Development.

INTRODUCTION

The Harrod-Domar model is the first view based model on capital accumulation in economic growth theory. This model suggests that economic growth rate is proportional to the rate of capital accumulation at a given level of technology. Then, Solow and Swan developed an exogenous growth model known as the Neo-classical growth model, and to analyze the economic growth they extended the Harrod-Domar model by adding labor as a factor of production. However, the exogenous growth theory has been criticized due to its assumptions failing to account for the process of long-term economic growth; therefore, an endogenous growth theory has been developed by Romer and Lucas. This latter theory suggests that factors of economic growth should be investigated within the system. Therefore, arguments began about how the growth rate can be changed through human capital. In the 1980s, understanding the impacts of education, health, Research and Development, technological improvements, new functions of government, accumulation of information, financial improvements, scale economies, income distribution, and many more factors of production required the reconsideration of growth and the factors of growth from a different perspective were revisited. (Berber, 2011) With the focus on this current paper, the role of healthcare spending in stimulating economic growth has been suggested in Mushkin’s health-led growth hypothesis. According to this hypothesis, health is a type of capital; thus, investment on health can increase income and lead to overall economic growth. In fact, health can affect economic growth through its impact on human and physical capital accumulation. (Elmi and Sadeghi, 2012) Although, healthcare expenditures are ordinarily hypothesized to be a function of real per capita gross domestic product (GDP), there are some reasons to suggest this could be a bilateral relationship, as it can be reasoned that population health is an input to the macroeconomic production function (Amiri and Ventelou, 2012)

CAMEROON HEALTH EXPENDITURES
Public health expenditure consists of recurrent and capital spending from government (central and local) budgets, external borrowings and grants (including donations from international agencies and nongovernmental organizations), and social (or compulsory) health insurance funds. Total health expenditure is the sum of public and private health expenditure. It covers the provision of health services (preventive and curative), family planning activities, nutrition activities, and emergency aid designated for health but does not include provision of water and sanitation. (WHO, 2017)

Health expenditure, private (% of GDP) Private health expenditure includes direct household (out-of-pocket) spending, private insurance, charitable donations, and direct service payments by private corporations. Health expenditure, private (% of GDP) in Cameroon was 3.17 as of 2014. Its highest value over the past 19 years was 4.27 in 1996, while its lowest value was 2.63 in 2011.
Health expenditure, public (% of total health expenditure) Public health expenditure consists of recurrent and capital spending from government (central and local) budgets, external borrowings and grants (including donations from international agencies and nongovernmental organizations), and social (or compulsory) health insurance funds. Total health expenditure is the sum of public and private health expenditure. It covers the provision of health services (preventive and curative), family planning activities, nutrition activities, and emergency aid designated for health but does not include provision of water and sanitation. The value for Health expenditure, public (% of total health expenditure) in Cameroon was 22.87 as of 2014. As the graph below shows, over the past 19 years this indicator reached a maximum value of 33.61 in 2011 and a minimum value of 17.29 in 1996.

Health expenditure, public (% of government expenditure) Public health expenditure consists of recurrent and capital spending from government (central and local) budgets, external borrowings and grants (including donations from international agencies and nongovernmental organizations), and social (or compulsory) health insurance funds. Health expenditure, public (% of government expenditure) in Cameroon was 4.26 as of 2014. Its highest value over the past 19 years was 8.53 in 2010, while its lowest value was 4.26 in 2014.

Health expenditure, public (% of GDP) Public health expenditure consists of recurrent and capital spending from government (central and local) budgets, external borrowings and grants (including donations from international agencies and nongovernmental organizations), and social (or compulsory) health insurance funds. Health expenditure, public (% of GDP) in Cameroon was 0.94 as of 2014. Its highest value over the past 19 years was 1.51 in 2010, while its lowest value was 0.78 in 1998.

Health expenditure, total (% of GDP) Total health expenditure is the sum of public and private health expenditure. It covers the provision of health services (preventive and curative), family planning activities, nutrition activities, and emergency aid designated for health but does not include provision of water and sanitation. Health expenditure, total (% of GDP) in Cameroon was 4.10 as of 2014. Its highest value over the past 19 years was 5.28 in 2010, while its lowest value was 3.86 in 1995.

DATA COLLECTION

This study aims to test whether there is causality between income and healthcare expenditure as well as whether healthcare expenditure is a driving force for economic growth in Cameroon. Can health care expenditures be an alternative way for Cameroon to catch up with developed countries? The theoretical model developed in this paper highlights a functional relationship between economic growth and health expenditure which is one of the components of human capital.

Economic growth = f (health expenditure, health indicators) + (trade, household consumption) (1) In the same way, capital accumulation is a key determinant of growth, particularly for developing countries; hence, some part of growth is determined through health status that reflects society’s human capital accumulation. Following the existing literature on the causality between economic growth and health expenditures, the model is described as follow:

Economic growth = f (Health Expenditures) (2)

For the purpose of this paper, the use of per capita gross domestic product ( INC ) as an indicator of economic growth and per capita health expenditure ( HEX ) as an indicator of healthcare expenditure is important. For both variables, the paper takes natural logarithms.

FINDINGS: LINKAGES BETWEEN HEALTH AND ECONOMIC DEVELOPMENT AND GROWTH The meaning of investing in health to improve human health forms a key strategy towards economic development. They distance themselves from previous interpretations of poverty as a cause of disease; instead, they emphasise various data on the channels of influence from disease to economic development. Even if health can be described as ‘an end in itself’, the focus on economic productivity diminishes the importance of health as a fundamental human right. Investing in health conveys a double meaning investing to improve health, economic productivity, and poverty; and investing capital, especially private capital, as a route to private profit in the health sector. People with higher incomes were healthier because they had more power/command on the goods and services promoting health. However, the thinking that health enhances economic growth reinforces/supplements and, to a degree, realigns ideas of the justifications of spending on health, justifications that were based on humanitarian and equity arguments. Wealth undoubtedly leads to health but health should be seen as a form of human capital and therefore it is seen as an input as well as an output for the growth process: the countries with educated and healthy populations are in a better situation regarding welfare especially in a favorable policy environment (Alleyne and Cohen, 2002: 1). Improvements in health may be as important as improvements in income in thinking about development and human welfare. Good health can be thought of as a goal in its own right, independently of its relationship with income. However, there is a link between health and income, which is important for policy purposes. To the extent that health follows income, income growth should be the priority for developing countries. To the extent that income is a consequence of health, investments in health, even in the poorest developing countries, may be a priority. This argument for health as an investment good is particularly relevant since there are cheap and easily applicable health policies that can improve health dramatically even in the poorest countries (Bloom and Canning, 2008: 1). Furthermore, the relationship between macroeconomics and health was the subject of an influential commission, chaired by professor Jeffrey Sachs, which reported to the World Health Organization in 2001 (Commission on Macroeconomics and Health 2001b). According to the findings of this commission, health affects economic growth. Therefore, there are some policies levers that any government can use in order to improving health and, the country’s broader development prospects. According to Alleyne (2009:45), the following need to be implemented that includes:
• Returns to individual health, through labor market outcomes, a demographic dividend, and increased savings, • The net value of increased income from household investment in human capital, • Societal returns to health, through economic activity such as the tourism industry or agriculture.

From the above, it can be noted that low- and middle-income countries like Cameroon, in partnership with high-income countries, should scale up the access of the world’s poor to essential health services, including through specific interventions. Labour is one of the basic elements of economic growth in a country. When considered on a micro level, labour productivity will fall depending on the rate of individual labour. For example, a person with malaria is not expected to work productively on a macro level. As the average health reduces in the society, total and individual labour productivity will also decrease. For example, it is estimated that in the South Africa one out of five adults have HIV virus today. As a consequence, this means at least one household member of a family has HIV virus and will die of AIDS soon. In such a social environment, even if it is healthy, it is very difficult for labour to work productively. As stated in different examples, health has a feature of being a prerequisite on productivity therefore economic growth (Yetkiner, 2006: 83). There are two approaches to estimating the effect of health on economic growth. The first is to take estimates of the effect of health from microeconomic studies and use these to calibrate the size of the effects at the aggregate level. The second is to estimate the aggregate relationship directly using macroeconomic data. Clearly, health is important. The largest poll in the world found that, across the world, health is what people value more than a happy family life, more than employment, and more than living in peace. The intrinsic, or constitutive, value of health is an important topic that has engaged the minds of many people. In developing countries, infectious diseases causing great losses in the society have higher incidence rates when compared to the richer countries. While the spending related to infectious diseases and contagious diseases is useful for the present society, it will also cause improvements in the health conditions of the next generations. Therefore, the outputs of the health expenditures in underdeveloped countries will be more apparent than developed countries. Besides, in the globalizing world, prevention of an epidemics in one country will also protect the neighboring countries, and increase in health in these countries and the neighboring countries will reflect to the economy as an improvement (Mushkin, 1962, 132; Akın, 2007: 30). Empirical research regarding the relationship between human capital and growth indicate that improvements in health and education affect productivity; and the increase in production can leads to economic growth. When education and health are considered as the two basic components of human capital, it is a fact that the investments made in these fields will provide contribution to economic growth in the long or short run. When the countries with higher economic development levels are considered, it is generally seen that the levels of education and health in these countries are also high. (Rengin, 2012)

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CONCLUSION There has been a growing interest in examining the relationship between income and health expenditure. Growth and sustainable growth are significant issues for developing countries that are specified as emerging market economies. As it is known, capital accumulation is a major component of growth and healthcare expenditure is a way to increase capital accumulation. Although there are differences in the economic structure and health expenditure of the countries in the panel, there is a tendency for an increase both in per capita GDP and health expenditure for all.

REFERENCES

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