Identifying the Relationship Between Health Expenditures and Life Expectancy at Birth: A Cointegration Analysis for MENA Countries

Introduction

Health expenditures are becoming an increasingly important item in countries where both the free market system is strong, and the public economy and public service concept is effective. In this sense, health expenditures consist of both public and private expenditure items. However, the effectiveness of health expenditures cannot be explained only by the large amount of expenditure (Dinçer and Yüksel, 2019; Shi et al., 2019). The MENA region consists of countries with different levels of social, economic and political development and stability. For this reason, there is no similar and common health expenditure policy for all MENA countries. However, in Lebanon, which has one of the highest life expectancies in the region, health care is provided through a private sector-dominated system, which is largely dependent on public sector funding. Lebanon spends 8% of GDP on health care. For example, as the poorest countries in the MENA region, the health system in Djibouti and Yemen is inadequate in providing basic health services and “mother and child deaths” and “malnutrition” are priority areas for health expenditures in these countries. However, in Qatar, another MENA country, traffic accidents are seen more frequently than other countries in the world, and accordingly, to do policies and expenditures for “reducing accidents and preventing injuries” have priority for the health system. Overall, countries in the MENA region lag behind developed countries such as the United Kingdom, Germany, and the USA, in terms of hospital capacity, the number of doctors, and medical staff. When the health expenditures are taken into consideration, the average health expenditure of the MENA region is quite lower than the world average.

Different domestic and foreign economic, social and political structures and problems of MENA countries result in different conclusions in the studies conducted on these countries. Health expenditures and life expectancy at birth are also observed to reach these different results. The insufficiency of health expenditures compared to other parts of the world forces citizens to pay a high rate of out-of-pocket payments. The increasing share of out-of-pocket payments exposes citizens to the risk of poverty and leads to imbalances in health access, leading to an increase in health outcomes. However, the increasing burden of health systems in MENA countries and the contraction of per capita health spending due to the decline in oil revenues since 2014 are likely to reflect the potential consequences for health spending and future labor productivity (Yazbeck et al., 2017). For example, Hamidi and Akinci (2016) emphasize in their study that the increase in health expenditures in the MENA region will increase the “life expectancy at birth” in this region. However, in our study, no relation was found between health expenditures in the MENA region and life expectancy at birth. Firstly, socio-economic outcomes of 16 countries in the MENA region (United Arab Emirates, Bahrain, Djibouti, Algeria, Egypt, Iran, Jordan, Kuwait, Lebanon, Morocco, Malta, Oman, Qatar, Saudi Arabia, Tunisia, and Yemen) were reviewed and it was handle data regarding health expenditures and life expectancy at birth. Secondly, similar studies were evaluated by reviewing the literature on health expenditures and life expectancy at birth. Thirdly, an empirical application was developed on the relationship between health expenditures and life expectancy at birth, and the Pedroni cointegration test was performed with a panel data method. Finally, empirical findings were evaluated, and the conclusion written.