Effects of Government Healthcare Expenditure on Economic Growth Based on Spatial Durbin Model: Evidence from China

Abstract

Background: The proportion of government healthcare expenditure in China increases due to rapid economic development in recent years. The growth of government healthcare expenditure can promote physical health improvement of human capitals and thereby facilitate economic growth. Hence, exploring the effects of government healthcare expenditure on economic growth is important. Methods: Spatial correlation of economic growth under different spatial weights was tested, and the effects of government healthcare expenditure on economic growth were analyzed by constructing a spatial Durbin model with the panel data of 31 provinces in China gathered from 2005 to 2017. Results: Government healthcare expenditure in China significantly and positively affects economic growth under three spatial weight matrices. The spatial weight of economic distance influences economic growth more significantly compared with the 0–1 spatial weight and the spatial weight of geographical distance. The total and the direct effects of government healthcare expenditure are significantly positive. Furthermore, the direct effects are significant, whereas the indirect effects show different degrees of significance. Conclusion: The total effect of government healthcare expenditure on economic growth is significant and positive, with direct effects exceeding the indirect ones. Hence, the China’s government must continue to increase financial investment to public health services to promote high-quality economic growth in the country.