Impacts of Healthcare Spending, Labor Force Participation Rate and Human Development on Economic Productivity in Short and Long-Term: A Dynamic Panel Analysis

Abstract

This paper investigates the multifaceted relationships of the healthcare expenditures, labor force participation rate and human development with per capita gross domestic product across various developing countries. Using a dynamic panel data of 115 developing countries from 2009 to 2021, this research has empirically estimated that economic productivity in the form of real GDP per capita follows a path-dependent trend in short term. It is also evident from a positive and significant coefficient of endogenous lagged variable that our system GMM two step estimations are reliable for further interpretations of the exogenous regressors. It is determined from our findings that human development is a major variable of interest for the heightening of economic productivity particularly in long-term rather than in short-term. This study also has practical implications for policymakers intended for achieving the Sustainable Development Goals (SDGs). In particular these goals are improvements in health, poverty (living standards), skilled education, decent work force and economic growth. Our results recommend that for gaining significant long term benefits policymakers should emphasis on an equitable and efficient allocation of resources in healthcare and human development initiatives. Finally, in developing countries strategies must be planned to enhance the quality of labor force rather than its quantity for achieving greater effects of labor force participation on economic productivity.