Healthcare expenditure and economic growth in Tanzania (1967-2015)

This study closely examines the relationship between healthcare expenditure and economic growth in Tanzania. It is intended to provide a comprehensible explanation with an empirical evidence of how public healthcare expenditure affects the Tanzanian economy and more also the Gross Domestic Product (GDP). The study seeks to examine the trends of public healthcare expenditure in Tanzania for a period of 48 years and how this healthcare expenditure trend has been translating to the GDP levels over the years. The study ultimately examines closely the relationship between healthcare expenditure and the level of GDP in the country. The study uses time series secondary data collected from various government documents and regression analysis is conducted to examine the relationship between healthcare expenditure and economic growth in Tanzania. This study uses the GDP data as the dependent variable while healthcare, education and agriculture expenditure as explanatory variables. The error correction model (ECM) is also used to correct for the data that was lost after differencing due to the unit root problems. The empirical results after the analysis is conducted clearly shows a positive and significant relationship between the public healthcare expenditure in Tanzania and the Gross Domestic Product. Expenditure on education is significant but negatively related to GDP while expenditure on agriculture remains insignificant in this case. The study recommends that the Tanzanian policy makers need to take public healthcare expenditures seriously because failure to allocate enough budget to be spent for healthcare needs will have a negative impact to the growth of the economy. It is paramount that the government should make sufficient efforts to raise healthcare expenditure in order to increase the country’s GDP.