Investigating the Direct and Interactive Impact of Government Health  Expenditure and Institutional Quality on Iran's Economic Growth

Ebrahim Bahrami Nia; Reza  Shamsollahi; Seyed Hossein  Izadi; Fatemeh Tavakoli Komkoui

doi:10.18502/jebhpme.v9i1.19419

Ebrahim Bahrami Nia Department of Economics, Payame Noor University, Tehran, Iran
Reza Shamsollahi Department of Economics, Ayatollah Boroujerdi University, Boroujerd, Iran
Seyed Hossein Izadi Department of Economics, Payame Noor University, Tehran, Iran
Fatemeh Tavakoli Komkoui Department of Finance and Accounting, Shahid Sadoughi University of Medical Sciences, Yazd, Iran

DOI: https://doi.org/10.18502/jebhpme.v9i1.19419

Keywords: Government Health Expenditure, Institutional Quality, Economic Growth, Iran

Abstract

Method: This study examines the short-run and long-run impacts of public healthcare expenditure on and institutional quality on Iran's economic growth during the period 2000-2022 are investigated using the autoregressive distribution lag (ARDL) method.

Results: The findings demonstrate that enhanced institutional quality has significantly contributed to Iran's economic growth during the study period. While health expenditure alone exhibited no statistically significant effect on economic growth, the interaction term between health spending and institutional quality yielded a positive and significant coefficient. This suggests that health investments foster economic growth only when coupled with robust institutional frameworks, highlighting the conditional role of governance in mediating health-economic outcomes. The results also demonstrated that in the period studied, household consumption expenditure, Trade openness levels and labor force exerted a statistically significant positive influence on Iran's economic growth trajectory.

Conclusion: Considering the results of this study, which indicate a positive interactive effect of institutional quality on the relationship between health expenditure and economic growth, it is recommended to Iranian economic policymakers to plan to improve institutional quality indicators. In order for government health expenditure to contribute to economic growth, it is essential that resources be allocated effectively and efficiently. Educational and health policies should be designed in a way that not only they do not have negative effects in the short term, but also help to improve the quality of the workforce and promote public health in the long- term.