The relationship between health expenditures and human development index

Growth in gross domestic product does not necessarily mean growth in human development; experience in global level demonstrated that income growth and human development are not always companions and in some countries, an increase in one of them was took place with a decrease in the other. On the other hand, a study has found that as government health expenditures grow the efficiency of such expenditures fall. Taking into account the above as the main concern, this paper hypothesizes and tests a positive relationship between expenditures states allocate to health and human development index. The model, human development index is considered as endogenous variable and total health expenditures are taken as descriptive variable. Estimation of the hypothesized relationship is carried out using countries combined data from 2000-2008, extracted from Iranian government's “2025 Horizon” document. Results suggest that health expenditures growth in these countries has led to increased human development index.