The dynamic relationship between health expenditure and economic growth: is the health-led growth hypothesis valid for Turkey?


The well-known health-led growth hypothesis claims a positive correlation between health expenditure and economic growth. The aim of this paper is to empirically investigate the health-led growth hypothesis for the Turkish economy. The bound test approach, autoregressive-distributed lag approach (ARDL) and Kalman filter modeling are employed for the 1975–2013 period to examine the co-integration relationship between economic growth and health expenditure. The ARDL model is employed in order to investigate the long-term and short-term static relationship between health expenditure and economic growth. The results show that a 1 % increase in per-capita health expenditure will lead to a 0.434 % increase in per-capita gross domestic product. These findings are also supported by the Kalman filter model’s results. Our findings show that the health-led growth hypothesis is supported for Turkey.

This is a preview of subscription content, log in to check access.

Fig. 1


  1. 1.

    See [31, 32] for details of HTP reforms implemented in the Turkish health system.

  2. 2.

    In order to save space, we report only results of unit root tests. However, other results are available on request. For detailed information about unit root tests (including their null and alternative hypothesis and decision process) [41] or [46] could be used.


  1. 1.

    Mushkin, S.J.: Health as an investment. J. Political Econ. 70, 129–157 (1962)

    Article  Google Scholar 

  2. 2.

    Hansen, P., King, A.: The determinants of health care expenditure: a cointegration approach. J. Health Econ. 15, 127–137 (1996). doi:10.1080/13504850802314437

    CAS  Article  PubMed  Google Scholar 

  3. 3.

    Hartwig, J.: Is health capital formation good for long-term economic growth?—Panel Granger-causality evidence for OECD countries. J. Macroecon. 32, 314–325 (2010). doi:10.1016/j.jmacro.2009.06.003

    Article  Google Scholar 

  4. 4.

    Wang, K.M.: Health care expenditure and economic growth: quantile panel-type analysis. Econ. Model 28, 1536–1549 (2011). doi:10.1016/j.econmod.2011.02.008

    Article  Google Scholar 

  5. 5.

    Bloom, D.E., Canning, D.: The health and wealth of nations. Science 287, 1207–1209 (2000). doi:10.1126/science.287.5456.1207

    CAS  Article  PubMed  Google Scholar 

  6. 6.

    Lewis, M., Jack, W.: Health investments and economic growth: macroeconomic evidence and microeconomic foundations. Policy Res. Work. Pap. 4877, 1–37 (2009). doi:10.1596/1813-9450-4877

    Google Scholar 

  7. 7.

    Schultz, T.P.: Health and schooling investments in Africa. J. Econ. Perspect. 13(3), 67–88 (1999). doi:10.1257/jep.13.3.67

    CAS  Article  PubMed  Google Scholar 

  8. 8.

    Romer, P.M.: Increasing returns and long-run growth. J. Political Econ. 94, 1002–1037 (1986). doi:10.1086/261420

    Article  Google Scholar 

  9. 9.

    Romer, P.M.: Endogenous technological change. J. Political Econ. 98, 71–102 (1990). doi:10.1086/261725

    Article  Google Scholar 

  10. 10.

    Lucas, R.E.: On the mechanics of economic development. J. Monet. Econ. 22, 3–42 (1988). doi:10.1016/0304-3932(88)90168-7

    Article  Google Scholar 

  11. 11.

    Barro, R.J.: Economic growth in a cross section of countries. Q. J. Econ. 106, 407 (1991). doi:10.2307/2937943

    Article  Google Scholar 

  12. 12.

    Barro, R.J., Lee, J.-W.: Sources of economic growth. Carnegie-Rochester Conf. Ser. Publ. Policy 40, 1–46 (1994)

    Article  Google Scholar 

  13. 13.

    Grossman, M.: On the concept of health capital and the demand for health. J. Political Econ. 80(2), 223–255 (1972)

    Article  Google Scholar 

  14. 14.

    Altug, S., Filiztekin, A., Pamuk, Ş.: Sources of long-term economic growth for Turkey, 1880–2005. Eur. Rev. Econ. Hist. 12(3), 393–430 (2008)

    Article  Google Scholar 

  15. 15.

    Denison, E.F.: Trends in American economic growth, 1929–1982. Brookings Institution Press, Washington, DC (1985)

    Google Scholar 

  16. 16.

    Gollin, D., Parente, S., Rogerson, R.: The role of agriculture in development. Am. Econ. Rev. 92(2), 160–164 (2002)

    Article  Google Scholar 

  17. 17.

    Gerdtham, U.G., Löthgren, M.: On stationarity and cointegration of international health expenditure and GDP. J. Health Econ. 19(4), 461–475 (2000)

    CAS  Article  PubMed  Google Scholar 

  18. 18.

    Baltagi, B.H., Moscone, F.: Health care expenditure and income in the OECD reconsidered: evidence from panel data. Econ. Model 27(4), 804–811 (2010)

    Article  Google Scholar 

  19. 19.

    Kumar, S.: Systems GMM estimates of the health care spending and GDP relationship: a note. Eur. J. Health Econ. 14(3), 503–506 (2013)

    Article  PubMed  Google Scholar 

  20. 20.

    Samudram, M., Nair, M., Vaithilingam, S.: Keynes and Wagner on government expenditures and economic development: the case of a developing economy. Empir. Econ. 36(3), 697–712 (2009)

    Article  Google Scholar 

  21. 21.

    Tang, C.F.: Multivariate Granger causality and the dynamic. Hitotsubashi J. Econ. 52(2), 199–214 (2011)

    Google Scholar 

  22. 22.

    Tang, C.F., Ch’ng, K.S.: The Granger causality between health expenditure and income in Southeast Asia economies. Afr. J. Bus. Manag. 5(16), 6814–6824 (2011)

    Google Scholar 

  23. 23.

    Mehrara, M., Musai, M.: Granger causality between health and economic growth in oil exporting countries. Interdiscip. J. Res. Bus. 1(8), 103–108 (2011)

    Google Scholar 

  24. 24.

    Elmi, Z.M., Sadeghi, S.: Health care expenditures and economic growth in developing countries: panel co-integration and causality. Middle-East J. Sci. Res. 12(1), 88–91 (2012)

    Google Scholar 

  25. 25.

    Kiymaz, H., Akbulut, Y., Demir, A.: Tests of stationarity and cointegration of health care expenditure and gross domestic product. Eur. J. Health Econ. 7(4), 285–289 (2006)

    Article  PubMed  Google Scholar 

  26. 26.

    Sülkü, S.N., Caner, A.: Health care expenditures and gross domestic product: the Turkish case. Eur. J. Health Econ. 12(1), 29–38 (2011)

    Article  PubMed  Google Scholar 

  27. 27.

    Tirasoglu, M., Yildirim, B.: Yapısal Kırılma Durumunda Sağlık Harcamaları ve Ekonomik Büyüme İlişkisi: Türkiye Üzerine Bir Uygulama. EJOVOC Electron. J. Vocat. Coll. 2(2), 111–117 (2012)

    Google Scholar 

  28. 28.

    Ak, R.: The relationship between health expenditures and economic growth: Turkish case. Int. J. Bus. Manag. Econ. Res. (IJBMER) 3(1), 404–409 (2012)

    Google Scholar 

  29. 29.

    Akar, S.: Türkiye’de Sağlık Harcamaları, Sağlık Harcamalarının Nisbi Fiyatı ve Ekonomik Büyüme Arasındaki İlişkinin İncelenmesi. Yönetim ve Ekonomi: Celal Bayar Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi 21(1), 311–322 (2014)

    Google Scholar 

  30. 30.

    Levine, R., Renelt, D.: A sensitivity analysis of cross-country growth regressions. Am. Econ. Rev. 82(4), 942–963 (1992)

    Google Scholar 

  31. 31.

    Akdağ, R.: Health transformation program in Turkey progress report. The Ministry of Health of Turkey, Ankara (2009)

    Google Scholar 

  32. 32.

    OECD: Reviews of health Systems: Turkey. OECD and the International Bank for Reconstruction and Development/The World Bank (2009)

  33. 33.

    Health, M.O.: Health statistics yearbook. T.R. Ministry of Health, Ankara (2014)

  34. 34.

    Health, M.O.: Health statistics yearbook. T.R. Ministry of Health, Ankara (2009)

  35. 35.

    TurkStat: Health expenditure statistics. In: Turkish Statistical Institute, Ankara (2014)

  36. 36.

    Zivot, E., Andrews, D.W.K.: Further evidence on the great crash, the oil-price shock, and the unit-root hypothesis. J. Bus. Econ. Stat. 10, 251–270 (1992). doi:10.1198/073500102753410372

    Google Scholar 

  37. 37.

    Lee, J., Strazicich, M.C.: Minimum Lagrange multiplier unit root test with two structural breaks. Rev. Econ. Stat. 85, 1082–1089 (2003). doi:10.1162/003465303772815961

    Article  Google Scholar 

  38. 38.

    Pesaran, M.H., Shin, Y., Smith, R.J.: Bounds testing approaches to the analysis of level relationships. J. Appl. Econ. 16, 289–326 (2001). doi:10.1002/jae.616

    Article  Google Scholar 

  39. 39.

    Narayan, P., Narayan, S.: Is there a long-run relationship between exports and imports? evidence from two Pacific Island countries. Econ. Pap. 23, 152–164 (2004)

    Article  Google Scholar 

  40. 40.

    Pesaran, M.H., Shin, Y., Smith, R.J.: Bounds testing approaches to the analysis of long run relationships. J. Appl. Econ. 16, 289–326 (1999). doi:10.1002/jae.616

    Article  Google Scholar 

  41. 41.

    Ertugrul, H.M., Mangir, F.: The tourism-led growth hypothesis: empirical evidence from Turkey. Curr. Issues Tour. 18, 633–646 (2015). doi:10.1080/13683500.2013.868409

    Article  Google Scholar 

  42. 42.

    Harvey, A.C.: Forecasting. Structural time series models and the Kalman filter (1989)

  43. 43.

    Dickey, D.A., Fuller, W.A.: Distribution of the estimators for autoregressive time series with a unit root. J. Am. Stat. Assoc. 74, 427–431 (1979). doi:10.2307/2286348

    Google Scholar 

  44. 44.

    Phillips, P.C., Perron, P.: Testing for a unit root in time series regression. Biometrika 75, 335–346 (1988). doi:10.1093/biomet/75.2.335

    Article  Google Scholar 

  45. 45.

    Ng, S., Perron, P.: LAG length selection and the construction of unit root tests with good size and power. Econometrica. 69, 1519–1554 (2001). doi:10.1111/1468-0262.00256

    Article  Google Scholar 

  46. 46.

    Ertugrul, H.M., Soydas, U.: Sanayi Üretim Endeksinin Durağanlık Özellikleri. İktisat İşletme ve Finans 28 (2013). doi:10.3848/iif.2013.328.3751

  47. 47.

    Brown, R., Durbin, J., Evans, J.: Techniques for testing the constancy of regression relationships over time. J. R. Stat. Soc. 37, 149–192 (1975). doi:10.2307/2984889

    Google Scholar 

  48. 48.

    OECD: OECD health statistics: Turkey. (2015). Accessed 15 Oct 2015

  49. 49.

    Atilgan, E., Çalişkan, Z.: The cost efficiency of Turkish hospitals: a stochastic frontier analysis. Iktis. Isletme Finans. 30(355), 09–30 (2015)

    Google Scholar 

Download references

Author information



Corresponding author

Correspondence to Emre Atilgan.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Atilgan, E., Kilic, D. & Ertugrul, H.M. The dynamic relationship between health expenditure and economic growth: is the health-led growth hypothesis valid for Turkey?. Eur J Health Econ 18, 567–574 (2017).

Download citation


  • Health-led growth hypothesis
  • Bound test
  • ARDL model
  • Kalman filter method
  • Turkey

JEL Classification

  • C32
  • I10
  • O12
  • O13