The Impact of Public Health Expenditure on Economic Development – Evidence from Prefecture-Level Panel Data of Shandong Province

Lin Li, Maoguo Wu, Zhenyu Wu


Public health expenditure is an indispensable part of social economy. The public has always paid close attention to public health expenditure. In order to study the quantitative relation between public health expenditure and social economic development, this paper investigates prefecture-level cities in Shandong Province, due to the unique characteristics of Shandong Province. Making theoretical and empirical contributions, this paper augments the Cobb-Douglas production function with public health expenditure and empirically analyzes economic development of prefecture- level cities in Shandong Province. A panel data set is established, followed by multivariate regression analysis. Empirical results find that public health expenditure per capita and coverage of medical insurance can significantly promote social economic development. However, the expansion and growth of the number of health institutions does not necessarily promote economic development. Instead, it may even hold back economic development by causing personnel redundancy and waste of resources. If the government transfers its investment focus from the scale and the speed of development of medical services to their fairness and efficiency, public health expenditure may vastly improve both public health and economic development.

Full Text:



Research in World Economy
ISSN 1923-3981(Print)ISSN 1923-399X(Online)


Copyright © Sciedu Press

To make sure that you can receive messages from us, please add the '' domain to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', check your 'bulk mail' or 'junk mail' folders.