Impact of Health Capital on Economic Growth in Pakistan

Abstract

Health is necessary for the well-being of individuals because healthy individuals can be more productive and efficient as compared to people who are unwell physically or emotionally. Healthy people tend to be more active, eager, excited and enthusiastic in their workplace and become more productive in their respective disciplines. Thus, healthy and productive workforce is important for both industrial and agricultural growth of the economy. Expenditure on health produces healthy populations which can lead to long and productive lives, less infant mortality, healthy mothers, healthy children and healthy population which engenders the high number of workforce to boost the economy of the country. Therefore, current research comprised to examine the impact of health capital on the economic growth in Pakistan. Keeping in view all the facts, importance and significance of health capital, it becomes crucial to empirically investigate what factors determine the impact of health capital on economic growth. For this purpose, data ranging from 1973 to 2020 was used to analyze the important relationships between the variables. The other variables included in the model are domestic investment, education and trade openness. Autoregressive distributed lag model and error correction model was used to estimate the long run and short run results respectively. The results showed that there exist long run as well as short run relationship between health capital and economic growth in Pakistan. Health capital expenditure has a long run convergence towards the equilibrium. Thus it is concluded that to boost the economy, the expenditures on human health are imperative and crucial. Education and openness of trade are also important for the economy.