Can healthcare ever be less than a necessity in MENA countries? A semiparametric estimation of the relationship between healthcare expenditure and GDP

Abstract

This paper considers the relationship between healthcare expenditure (HCE) and gross domestic product using Baltagi and Li (Ann Econ Financ 3:103-116, 2002) semiparametric fixed effects regression estimator in a sample of 16 MENA countries over the 1995-2012 period. Findings indicate that income elasticity is not consistent but varies with income level and healthcare is a necessity for the non-oil rich countries (non-GCC) whereas it is an inferior good for the wealthiest countries in MENA; Qatar, United Arab Emirates (UAE) and Kuwait. Furthermore, it is found that the infant mortality rate per 1000 live births has a negative effect on per capita HCE in non-GCC countries and the proportion of the population age 65 and above is statistically significant in Bahrain, Oman and Saudi Arabia.