Economic and administrative sciences
(to obtain a master's degree)
February 2012
Abstract
Given the importance of economic growth in the development of societies, it is of particular importance to examine the factors that affect economic growth. In the early theories of economic growth, the main emphasis is on the role of physical capital; But today, the role of human capital is particularly prominent in the endogenous growth model. Redesigning the impact of human capital in growth models led to the use of health as a substitute for human capital in applied studies. In the current research, the effect of government spending on health and health on Iran's economic growth during 1357-1389 has been investigated using the ARDL method. The results obtained from this research show the positive and long-term impact of health expenditures on Iran's economic growth during the years under review. So that an increase in health expenditures by one unit (billion Rials) increases the growth rate of GDP by 0.0004% in the long term.
Key words: human capital, health, economic growth, ARDL
Chapter 1 - Research overview
1-1. Introduction
The effect of economic growth and gross national product on many macro variables such as private sector consumption expenditures, tax revenues, employment, inflation, income distribution and so on. . . It has caused economic growth to become one of the most important macroeconomic indicators. For this reason, a considerable part of the economics and development literature is devoted to the investigation of factors affecting economic growth. By referring to the literature on growth and development, it is clear that "capital" It is among the most key variables that determine economic growth. The wide range of researches related to the role of physical capital (machines and buildings), human capital and social capital in economic growth shows this fact. The concept of human capital was first introduced by Schultz[1] and Denison[2] in the early 1960s. Health, experience and education are the three main dimensions of human capital, in which the role of health is significant.
In this research, the effect of government spending on health and health on economic growth in Iran has been investigated.
1-2. Statement of the problem
According to the studies, physical capital and human capital are factors that affect economic growth. The concept of human capital in the literature of economic development includes education, health, skills (expertise), experience and other investments that increase the productivity of the labor force and, as a result, increase economic growth. Most of the studies on human capital have focused on education as a measure of human capital and less attention has been paid to health. When we talk about improving the quality of the workforce, the issue is not limited to education, skills and experience, but the health and safety of the workforce should also be considered as a factor in the accumulation of human capital. Considering the simultaneous relationship between health and economic growth, examining the effect of each of these two without considering their mutual effect will not be very valid in terms of econometric methods. On the one hand, the people of a healthy society are more cheerful and energetic and work hard and work with more motivation. On the other hand, direct and indirect costs that lead to a decrease in national income and as a result growth and development are reduced. For this reason, societies have paid special attention to increasing the health index of society. Investing in human resources and improving its quality has the greatest role in increasing economic growth. Also, proper health and hygiene improves and increases the power of the workforce; which subsequently leads to increased production and economic growth. The purpose of this research is to investigate health indicators on the economic growth of Iran.
1-3. Research limitations
The current research is for Iran's economy during the years 1357-1389. It should be noted that the required data is provided by the Iranian Statistics Center and Central Bank.
1-4. Research hypothesis
Government spending on health has a positive effect on Iran's economic growth.
1-5. Research objectives:
Iran's economy has experienced significant fluctuations in the economic growth rate during the last half century.Increasing productivity and paying attention to human capital are among the most important things that have been considered in the development plan. Therefore, the aim of the current research is to investigate the importance of health on human capital and its effect. on economic growth in Iran.
1-6. Summary and steps of the research method:
In the present research, all the information was first collected by the library method, and then the literature of the research subject It is categorized. With the help of the literature review of the research topic, a suitable model is designed to investigate the effect of health on economic growth, then by using econometric techniques, the parameters of the model are estimated and the research hypothesis is tested. In the final stage, the dissertation is compiled.
Chapter Two - Review of the subject literature
1. Introduction
Since the beginning of the emergence of economics as a science, economic growth has been the focus of economists, although the intensity and weakness of this attention has been different in different periods. Much of Adam Smith's Wealth of Nations is about economic growth. After World War II, attention to long-term economic growth became vital again. One of the reasons was the provision of national production data, which was collected first in the United States and later in other advanced industrial countries, this information enabled economists to measure economic growth at the national level for the first time (Jamshidenjad, 2014).
During the past years, there have been three different waves about growth theory. The first wave of work by Harrod and Dumar It is related. The second wave of development of the neoclassical theory was One of the most important It is possible to look at the long-term economic growth pattern of Solo. He pointed out that it is based on the substitution between labor and capital. The third wave arose as a reaction to the deficiencies in the neoclassical model, among which Romer's theories can be found. and Lucas named In fact, the endogenous growth patterns that entered the literature of economic growth from the second half of the 80s caused the flourishing of this branch of economics (same source).
The history of research on the effect of health on economic growth goes back to more than two decades. Fogel (1993, 1991 and 1994) is one of the first researches in this field, which led to him winning the Nobel Prize. He states that one third of the economic growth in England in the last 200 years was due to the improvement of nutrition and health. So that in recent decades, the decrease in mortality has led to an increase in life expectancy.
2-2. Health
Human capital, as one of the most important factors affecting economic growth, has two main aspects: education and health. In the cross-country studies that have been conducted in the field of economic growth, human capital has been considered as education in most cases and less attention has been paid to health. But in recent studies, health is not only a part of human capital, but simultaneously and independently included in growth models and its effects on economic growth have been analyzed and investigated.
Health is directly and indirectly effective on economic growth. Improving health makes human capital increase through the accumulation of health capital and has a direct impact on growth. On the other hand, improving health through increasing life expectancy and reducing the number of working days lost by the workforce due to their own or their relatives' illness improves the productivity of the workforce and indirectly affects production. Also, the improvement of health has increased the life expectancy, as a result, the desire to save has increased among people, which increases investment and faster economic growth. In studies related to health and economic growth, various criteria for health have been considered. Among these criteria, we can mention the life expectancy index, the height and weight of people, the health expenditures of the government, the death rate of children and adults, and the birth rate.
Government health spending, like government spending on education, improves the quality of human resources and increases life expectancy and longevity. Therefore, it increases the desire to save and invest and causes faster economic growth.