Defense Expenditure and Its Impact on Health in the SAARC Countries

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.