The Relationship between Health and Economic Growth in Nigeria

There seems to be a broad consensus that economic growth can definitely lead to improvement in health. For example, economic growth could lead to increased availability of food; increased earnings which makes health spending more affordable; and also raises demand for good health services. Higher growth could also imply higher public revenue which can translate to higher investment in health infrastructure. Thus, the question that would readily come to mind is whether causality exists in the reverse direction? In other words, does improve health leads to higher growth? If yes, how important is the contribution of health when one accounts for other potential factors that are empirically known to drive growth? It is therefore likely that causality exist in both directions, though they could be difficult to measure and estimate. Nevertheless, it is evident that there is increasing debate on which direction dominates. A resolution or informed contribution to this debate would have profound policy implications. For example, an empirical finding which suggests that growth lowers infant mortality could spur the necessity for putting in place growth-enhancing policy reforms. In the contrast, if it is observed that improve health of the population is growth enhancing, then it would be noted that social returns on policies that improve health status have been largely understated, and thus health improving policies would be part of the set of intervention measures to increase growth. There are several studies on economic growth in Nigeria. Most of the studies have related growth to other macroeconomic fundamentals while omitting the human capital (both in terms of education and health) dimension of the analysis. The role of health in these analyses is generally absent. Also, most of these studies are carried out at the micro-level using single point survey rather than multiple points survey. Therefore, the ability to generate a health production function from a point survey has been questioned. Furthermore, most of these studies have neglected the possibility of reverse causation and endogeneity in the health-growth-poverty relationship leading to what is generally regarded as specification bias. Hence findings from these studies have been inconclusive, contradictory and unreliable. Thus, there has been general absence of consensus on the relationship. Hence, the lack of consistent findings in the literature, and possibly specification problems in the early works, lends justification to the analysis that we pursue in this study.