PER CAPITA HEALTH EXPENDITURE DETERMINANTS IN SUB-SAHARAN AFRICA: A PANEL DATA ANALYSIS

“ABSTRACT

This study examines the factors that determine the level of per capita health expenditure in sub Saharan Africa. Using data from 2001 to 2014 and a sample of 20 countries, we test the effects of various demographic and macroeconomic variables on health expenditure per capita. The model was estimated using the Panel Fixed and Random Effects Model as well as the panel Dynamic Ordinary Least Squares (DOLS) estimation technique proposed by Phillips and Loretan (1991) to generate both short and long run coefficients. The results suggest that demographic variables play a role in determining health expenditure per capita”. Health is found to be necessity in the long run in both low and middle income countries as well as the joint sample; however results from the sub-regional groupings are mixed. Infant mortality rate, proportion of the population living in urban areas, per capita gross domestic product and life expectancy are found to significantly affect per capita health expenditure in the DOLS estimates of the joint sample. In the fixed and random effects model however, only per capita GDP and infant mortality rate are found to be significant. Per capita GDP is the only significant determinant in all the models examined. Overall, the results confirm that GDP remains the most important determinant of per capita health expenditure.