Why should we increase our health expenditures?

You need to clean your irrigation canal before the water comes.

Chinese proverb

The pandemic proved once again that the formula for taking care of the health system timely without the risk of disease was the most effective approach. States need to create an effective health system that is able to prevent potential health hazards to people on time, not just when diseases knock at their doors. To do this, states must first increase health expenditures.

From a scientific point of view, we see that health expenditures, which are an important part of human capital, affect economic growth. Numerous studies on the relationship between health expenditures and economic growth have yielded interesting results. For the 35 OECD countries, if the share of health expenditures in GDP increases by 1%, economic growth can increase by 0.903%. [1] Therefore, developed countries are interested in increasing the share of health expenditures in GDP.

The impact of health and education expenditures on economic growth was examined using the ARDL and Error Correction Model based on Turkey's 1998-2016 data. Empirical research has shown that while education expenditures do not have a significant impact on economic growth in the long run, health expenditures have a significant and one-sided relationship. A 1% increase in health expenditures boosted economic growth by 1.13%.

The table below shows the shares of countries that have allocated more funds on health in 2018. The United States is the world leader in per capita health expenditures.

Azerbaijan has the lowest health expenditures among the South Caucasus republics. Compared to Georgia and Armenia, per capita health expenditures in Azerbaijan have been $ 30-40 less. Despite Azerbaijan's high natural resource revenues, since expenditures on the human resource are not high, it is not able to stimulate sustainable economic growth. The power of physical capital is growing, but the promotion of economic growth by human capital is lagging behind.

According to last year's data, our country is among the lowest in the region in terms of the level of health services. According to Numbeo, one of the largest databases in the world, Azerbaijan ranks 90th in the ranking of 93 countries. In terms of the level of health services, Azerbaijan is ahead only of Bangladesh, Iraq, and Venezuela. [2]

Another factor contributing to the increase in health expenditures is technological innovation. Paul Krugman, the 2008 Nobel laureate in economics, explains this with an interesting trend: "Progress, development, and innovation in other areas allow us to reduce costs in these areas; however, technical innovations in the field of health, the application of innovation in this area are constantly increasing expenditures in these areas, and these expenditures continue to rise, it is impossible to prevent." The main task for the Azerbaijani government is to increase health expenditures, as well as to place a special emphasis on the health budget in socially oriented budget expenditures. This is not only to increase the health budget but also to ensure its sustainable growth. The fact that health expenditures are among the priority expenditures is also the cornerstone of a healthy society.

Mammed Talibli

Sources:

[1]  https://dergipark.org.tr/tr/download/article-file/409121 

[2]  https://www.yeniavaz.com/az/news/159933/azerbaycan-sehiyye-xidmetlerinin-seviyyesine-gore-93-olke-arasinda-91-ci-yerde