Defense Expenditure and Its Impact on Health in the SAARC Countries

Defense Expenditure and Its Impact on Health in the SAARC Countries

Maniklal Adhikary (The University of Burdwan, India) and Melisha Khatun (Aliah University Kolkata, India)
DOI: 10.4018/978-1-5225-4778-5.ch018

Abstract

Resources are scarce, but needs are unlimited. Therefore, the rational attempt must be designed in order to allocate optimally the limited resources to satisfy as maximum as possible our dire needs of life. This chapter attempts to examine the impact of military expenditure (percentage of GDP) on health issues of five selected SAARC countries by employing the panel data model from the period 1995 to 2015. The authors have found that as military expenditure increased, total health expenditure (percentage of GDP), public health expenditure (percentage of GDP), and private health expenditure (percentage of GDP) decreased. The present study has also witnessed an inverse relation between population growth and health expenditure. Military expenditure adversely affected the two health indicators, namely life expectancy at birth and infant mortality rate.
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Introduction

Resources are scarce but needs are unlimited. Therefore, the rational attempt must be designed in order to allocate optimally the limited resources to satisfy as maximum as possible our dire needs. And this calls for a process of economic development which helps a nation improve the economic and social well-being of her people. The policy of any country therefore must be linked with such a process of economic development that should be concerned in the enlargement of the people’s entitlements and their corresponding capabilities, morbidity, nourishment, literacy, education and other socio-economic indicators.

In the early 1990s economists began to put greater emphasis on the role of human capital as a contributing factor of productivity and economic growth. Since then, the importance of health and education in economic growth has received much attention and a strong consent has emerged in the last decade that human capital accumulation is an important determinant of economic growth. Education and the health level of society is the main instrument in this context. Therefore, it can be claimed that there is a close relationship between the health level of society and its economic development. Investment in health and education can enhance human functioning, which helps to reduce poverty (by improving employability) and accelerate economic growth. Similarly, resources generated through income poverty reduction and economic growth can be used to augment human functioning (Adhikary & Khatun, 2017). This in turn gives a drive to economic growth. Since healthcare is one of the main component of human capital investment, rising national healthcare spending would tend to increase labor productivity, quality of life and general welfare. Health expenditure has also been credited for extending life expectancy, and reducing morbidity and infant mortality rates (Murthy & Okunade, 2009). Rise in health care expenditures in a country causes increases in social security, tranquility, safety and welfare, which leads to improved labor efficiency. Health care helps people with acute conditions to recover and return to work quickly. In general, healthier people can work harder and longer, and also think more clearly (Amiri & Ventelou, 2012). Many factors influence the economic growth process. These include internal development policies, political stability, domestic capital formation, development of human capital, banking and financial infrastructure, export policies, foreign direct investment, and foreign aid (Neelankavil, Stevans & Roman, 2012). The basic economic problem specific to emerging market economies is to ensure rapid and stable economic growth. Therefore, sustainability of economic growth is important view of argument for emerging economies in order to become developed and maintain their positions. Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own (World Commission on Environment and Development, 1987). There are mainly three different concepts of sustainable development, namely, the economic, the ecological and the socio-cultural (Munasinghe, 1993). A socially sustainable system requires achieving distributional equity, adequate provision of social services including health and education, gender equality, and good governance. Hence, it can be said that health care expenditures have implications for both current value of human capital and the long-run sustainable growth.

Key Terms in this Chapter

Per Capita Gross Domestic Product (in PPP): GDP per capita based on purchasing power parity (PPP). PPP GDP is gross domestic product converted to international dollars using purchasing power parity rates. An international dollar has the same purchasing power over GDP as the U.S. dollar has in the United States. GDP at purchaser's prices is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. It is useful to measure the living standard of a nation and also produces useful statistic for comparison of wealth between different nations.

Maternal Mortality Ratio: Maternal mortality ratio is the number of women who die from pregnancy-related causes while pregnant or within 42 days of pregnancy termination per 100,000 live births.

Military Expenditure: Military expenditures includes all current and capital expenditures on the armed forces, including peacekeeping forces; defense ministries and other government agencies engaged in defense projects, paramilitary forces, if these are judged to be trained and equipped for military operations; and military space activities. Such expenditures include military and civil personnel, including retirement pensions of military personnel and social services for personnel; operation and maintenance, procurement, military research and development, and military aid (in the military expenditures of the donor country).

SAARC: It is the abbreviated form of South Asian Association for Regional Cooperation is regional inter-governmental organization and geopolitical union in South Asia with the member states include Afghanistan, Bangladesh, Bhutan, India, Nepal, the Maldives, Pakistan, and Sri Lanka.

Private Health Expenditure: Private health expenditure includes direct household (out-of-pocket) spending, private insurance, charitable donations, and direct service payments by private corporations.

Total Health Expenditure: 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.

Panel Data: It is the pooling of cross sectional information over the data available for a small length of time.

Public 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.

Life Expectancy at Birth: Life expectancy at birth indicates the number of years a newborn infant would live if prevailing patterns of mortality at the time of its birth were to stay the same throughout its life.

Infant Mortality Rate: Infant mortality rate is the number of infants dying before reaching one year of age, per 1,000 live births in a given year.

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