The Impact of Health Capital on Economic Growth: Empirical Evidence from Morocco

Abstract

The objective of this paper is to analyse the impacts of health on economic growth in Morocco, within the framework of the production function augmented with health capital.  To do so, the ARDL methodology and several diagnostic and specification tests were used to estimate the impact of health capital on economic growth using time series data covering the period 1990-2020.

The results confirm that health capital (measured by health expenditure per capita and life expectancy at birth) positively and significantly affects economic growth in Morocco. In particular, the lagged equilibrium error correction coefficient of a short-run shock is about 43.29% for all estimated variables, implying a considerably high long-run speed of adjustment to the equilibrium after a short-run shock.

Also, the results imply that Moroccan economic growth could be significantly improved if health capital spending was increased. This would eventually have a substantial impact on human productivity, leading to an improvement in output per capita. Therefore, policy makers should strive to create institutional capacity to improve basic health services by strengthening the infrastructure of health institutions that produce a healthy and quality workforce. Based on the premise that there are few or no studies on the impact of health on the Moroccan economy, this article provides new evidence on the potential effect of health on Morocco’s economic growth over the past three decades.