Public Health Expenditure, Human Capital, and Economic Growth in Latin America and the Caribbean

Abstract

The link between health and economic growth is highly relevant in the development debate in Latin America and the Caribbean. This study aimed to analyze whether the effect of public health expenditure on economic growth depends on the level of human capital in Latin America and the Caribbean. To this end, a panel of 20 countries in the region over the period 2001–2019 is used, and panel threshold regression models are estimated. The results show that the effect of public health expenditure on economic growth is positive but not homogeneous, as it becomes stronger when countries reach higher levels of human capital, both in education and in health. In this sense, the study provides evidence that the effectiveness of health expenditure is conditioned by the accumulation of aggregate human capital. The findings suggest that growth-oriented public policies should take these heterogeneities into account in order to better adapt to the conditions of each country.