Effect of residents’ health indicators on economic growth in Kenya

Abstract

Economic growth is important as it measures the prosperity of a nation which indeed increases the output per person and factors like human capital, physical capital and technological change, which are the main drivers towards achieving economic growth. Kenya’s Vision projected an economic growth rate of 10 per cent per annum from 2008 to 2030, which is yet to be achieved to date. The purpose of this study was to establish effect of residents’ health indicators on economic growth in Kenya. The specific objectives of the study were to determine the effect of: healthcare expenditure, life expectancy, nutrition status and access to health services on economic growth in Kenya. The study adopted the endogenous growth theory and incorporated key health indicators into the model as a function of human capital. Research design employed was explanatory research design and it relied on secondary data from World Bank from 1987 to 2018. The study employed Johnsen co-integration test, Error Correction and multiple regression models. The results indicated that the coefficient of nutrition status was -5.6256, p  0 . 042  0 . 05 , which was negative and significant at 5 percent level of significance. This implied that in the long run, an increase by one percent of coefficient nutrition status would result in a reduction of GDP growth rate by 5.6256 percent. Applying regression model, the results revealed that coefficient of life expectancy was 1.3292, p  0 . 017  0 . 05 which was positive and significant at 5 percent level. This implied that for every one percent increase in coefficient of life expectancy, GDP growth rate could increase by 1.3292 percent. Coefficient of nutrition status was -2.072, p  0 . 019  0 . 05 which was negative and significant at 5 percent level. This implied that for every one percent increase in coefficient of nutrition status, GDP growth rate would fall by 2.072 percent. Considering that increased life expectancy had direct effect on increase in economic growth rate, Kenyan government could put in place policies promoting citizen’s health. Suitable social sector policies and government interventions are required to increase life expectancy and consequently, the economic growth rate. Furthermore, there is also a need to involve health human force in macro and micro policy-makings and critically examine other determinant of health care expenditure.