The Relationship Between Pharmaceutical Expenditures and Economic Growth from the Human Capital Perspective

Abstract

The growth theory focuses on human capital as a determinant of economic progress since the second half of the 20th century. In this study, human capital and its health and education components are examined. The aim of the study is to evaluate the relationship between human capital and education and health also the effect of human capital on growth. In this context, schooling rates for education and pharmaceutical expenditures, which may be the biggest financial measure for the concept of health, are emphasized in general. In the literature, studies on the relationship between human capital and education are predominant. In this study, the emphasis is placed on the health component of human capital and health related pharmaceutical expenditures. The study differs from the majority of studies in the literature considering these goals and objectives. The fact that pharmaceutical expenditures are an important element of health expenditures and the relationship between health expenditures and economic growth under the scope of human capital, as set forth in the studies, may lead to an expectation that the expenditure on pharmaceuticals will affect economic growth in the same direction as health expenditures. The relationship between pharmaceutical expenditure that consists of pharmaceutical prices, qualitative or quantity of pharmaceuticals and quantitative consumption amount and economic growth is examined in this context. As a result of the detailed regression analysis using panel data, this study concludes that pharmaceutical expenditures do not affect economic growth in positive direction. Within the same model, it is concluded that capital stock, foreign direct investments, school enrollment rate and unemployment rate affect economic growth.