Researching the Relationship Between Health and Financial Development: Case of Low-Income African Countries

Abstract

For the reason that individuals can both receive education and participate in economic activities by putting their education into practice, only if they are healthy.  In order to carry out the study, data collected from 11 African countries between the years 2001-2017 was used. The causality research was investigated with the Dumitrescu and Hurlin test, which cares about the cross-section dependency. The variables of the study have cross-section dependence. As a result of the causality research, a bidirectional relationship was found between financial development and health variables. With financial development, employment areas expand, and the wage gap between skilled and unskilled labor decreases. On the other hand, it becomes possible for the state to make more health expenditures for the poor. The health levels of individuals are important in order to transform the education they receive into economic output. In this context, a bidirectional relationship is expected between financial development and health. In this study, the analysis was carried out using the data of 11 low-income African countries. As a result of the research, a strong relationship was found between health and financial development, supporting the literature.