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Does investment in the health sector promote or inhibit economic growth?

ABSTRACT: BACKGROUND: Is existing provision of health services in Europe affordable during the recession or could cuts damage economic growth? This debate centres on whether government spending has positive or negative effects on economic growth. In this study, we evaluate the economic effects of alternative types of government spending by estimating "fiscal multipliers" (the return on investment for each $1 dollar of government spending). METHODS: Using cross-national fixed effects models covering 25 EU countries from 1995 to 2010, we quantified fiscal multipliers both before and during the recession that began in 2008. RESULTS: We found that the multiplier for total government spending was 1.61 (95% CI: 1.37 to 1.86), but there was marked heterogeneity across types of spending. The fiscal multipliers ranged from -9.8 for defence (95% CI: -16.7 to -3.0) to 4.3 for health (95% CI: 2.5 to 6.1). These differences appear to be explained by varying degrees of absorption of government spending into the domestic economy. Defence was linked to significantly greater trade deficits (? = -7.58, p=0.017), whereas health and education had no effect on trade deficits (peducation=0.62; phealth= 0.33). CONCLUSION: Our findings indicate that government spending on health may have short-term effects that make recovery more likely.

SUBMITTER: Reeves A

PROVIDER: S-EPMC3849102 | biostudies-literature | 2013

REPOSITORIES: biostudies-literature

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Does investment in the health sector promote or inhibit economic growth?

Reeves Aaron A Basu Sanjay S McKee Martin M Meissner Christopher C Stuckler David D

Globalization and health 20130923

<h4>Background</h4>Is existing provision of health services in Europe affordable during the recession or could cuts damage economic growth? This debate centres on whether government spending has positive or negative effects on economic growth. In this study, we evaluate the economic effects of alternative types of government spending by estimating "fiscal multipliers" (the return on investment for each $1 dollar of government spending).<h4>Methods</h4>Using cross-national fixed effects models co ...[more]

PMID: 24059873

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Project description:ObjectivesDecision-makers are increasingly requesting economic analyses on transportation-related interventions, but health is often excluded as a determinant of value. We assess the health-related economic impact of bicycle infrastructure investments in three Canadian cities (Victoria, Kelowna and Halifax), comparing a baseline reference year (2016) with the future infrastructure build-out (2020).MethodsThe World Health Organization's Health Economic Assessment Tool (HEAT; version 4.2) was used to quantify the economic value of health benefits associated with increased bicycling, using a 10-year time horizon. Outputs comprise premature deaths prevented, carbon emissions avoided, and a benefit:cost ratio. For 2016-2020, we derived cost estimates for bicycle infrastructure investments (including verification from city partners) and modelled three scenarios for changes in bicycling mode share: 'no change', 'moderate change' (a 2% increase), and 'major change' (a 5% increase). Further sensitivity analyses (32 per city) examined how robust the moderate scenario findings were to variation in parameter inputs.ResultsPlanned bicycle infrastructure investments between 2016 and 2020 ranged from $28-69 million (CAD; in 2016 prices). The moderate scenario benefit:cost ratios were between 1.7:1 (Victoria) and 2.1:1 (Halifax), with the benefit estimate incorporating 9-18 premature deaths prevented and a reduction of 87-142 thousand tonnes of carbon over the 10-year time horizon. The major scenario benefit:cost ratios were between 3.9:1 (Victoria) and 4.9:1 (Halifax), with 19-43 premature deaths prevented and 209-349 thousand tonnes of carbon averted. Sensitivity analyses showed the ratio estimates to be sensitive to the time horizon, investment cost and value of a statistical life inputs.ConclusionWithin the assessment framework permitted by HEAT, the dollar value of health-related benefits exceeded the cost of planned infrastructure investments in bicycling in the three study cities. Depending on the decision problem, complementary analyses may be required to address broader questions relevant to decision makers in the public sector.

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Does investment in the health sector promote or inhibit economic growth?

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Does investment in the health sector promote or inhibit economic growth?

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