International Journal of Economics, Commerce and Management

United Kingdom ISSN 2348 0386 Vol. 12, Issue 7, July 2024

[Link]

PUBLIC HEALTH EXPENDITURE AND ECONOMIC

DEVELOPMENT NEXUS: EVIDENCE FROM NIGERIA

WOJI, Martin Tamai

School of International Education,
University of International Business and Economics, Beijing, China
emmanuelsamueludo@[Link]

Abstract
This study explores the nexus between public health expenditure and economic development in
Nigeria from 2000 to 2023. Nigeria faces significant healthcare funding challenges, with
expenditures below the World Health Organization’s recommended threshold of 5% of GDP,
thus affecting overall economic growth. The Autoregressive Distributed Lag (ARDL) model was
adopted to assess the broad objectives of the short- and long-term effects of public health
expenditures on the economic development nexus and address potential endogeneity. Based
on the endogenous growth theoretical approach, the findings reveal a long-run cointegrating
nexus between public health expenditure and economic development. Poverty significantly
hampers economic growth through structural issues such as high-income inequality, which limits
the effectiveness of health investments. This study underscores the need for targeted
healthcare financing and strategic investment in public health to address endemic diseases,
enhance human capital, and boost productivity.
Keywords: Public Health Expenditure, Economic Development, ARDL Model, Nigeria, Human
Capital

INTRODUCTION
A sustainable and clean environment enhances individuals’ mental, physical, and
emotional stability through good health, ultimately boosting economic productivity (Lee 2019;
Umar 2017). Government investment in social health projects, as highlighted by UNAIDS
(2016), improves health expenditure through life expectancy and reduces under-5 mortality

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rates, morbidity, and other killer diseases such as malaria and tuberculosis. This is especially
crucial for emerging economies such as Nigeria, which face significant challenges from endemic
diseases (Danforth et al., 2017).
Good health is a vital indicator of a standard of living, and is essential for the success of
national development plans. In the context of Nigeria's estimated 200 million citizens, Ercelik
(2018) underscores the importance of health in assessing living standards. Cole and Neumayer
(2006) argue that health is a cornerstone of human capital development, influencing various
aspects of personal and societal progress. The World Health Organization (WHO, 2019)
highlights a developmental nexus in which labor productivity depends on the health conditions
of the population and their education level.
Governmental health financing is critical to human capital accumulation and endogenous
growth. However, Nigeria’s healthcare funding of 2-3% of GDP is inadequate, well below the
global standard of at least 5% of the GDP necessary for essential health services (Gizem, 2018).
In response, Nigeria established the National Health Insurance (NHI) scheme and the Basic
Health Care Provision Fund (BHCPF) to increase health financing and improve access to quality
health services for all citizens, irrespective of employment status (Parliamentary Monitoring
Group, 2017). Achieving these objectives requires effective budget allocation and monitoring to
avoid the chaotic disbursement of funds, often favoring urban areas over rural ones.
Empirical literature establishes that government healthcare expenditure (HEX) is crucial
for development. Rajeshkumar and Nalraj (2014) revealed that a higher income per capita in
developed nations leads to improved standards of living and life expectancy (Figure 1). Despite
Nigeria's increase in GDP per capita, healthcare expenditure remains below the recommended
5-6% of GDP.

Figure 1: Income per capita, Life expectancy rate and Government expenditure on health
60 6000

50 5000

40 4000

30 3000

20 2000

10 1000

0 0

Domestic general government health expenditure (% of current health expenditure)

Life expectancy at birth, total (years)
GDP per capita

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Previous studies on the relationship between health and economic development have
revealed diverse influences. Sharma (2018) and Bloom et al. (2018) reported a linear and
nonpositive nexus, whereas Sede and Ohemeng (2015) and Serag et al. (2019) reported a
nonlinear nexus. Kunze (2014) points out the complexity of determining a dominant outcome
due to mixed results, arguing that other macroeconomic factors might influence the health-
economic growth nexus directly because the health finance and economic growth nexus is
indirect (Sharma, 2018; Pakdaman et al., 2019). Figure 1 reveals significant fluctuations in
governmental health expenditure, peaking at 26.89% in 2001, dipping to 13.60% in 2010, and
slightly increasing to 15.27% in 2023 due to investment in the heartcare system due to the
COVID-19 pandemic. Similarly, life expectancy (LIEX) increased from 47.19 years in 2000 to
54.68 years in 2023, indicating overall health improvements. However, these fluctuations in
health expenditure (HEX) do not directly correlate with life expectancy trends, indicating that
other factors, such as spending efficiency, healthcare infrastructure, and access to care play
significant roles.
Poverty also influences the relationship between health improvement and economic
growth. Omoniyi (2018) argues that poverty impacts the health-economic growth link. The
saying "health is wealth underscores that ill health is a dimension of poverty (Bloom, 2003).
Improving healthcare reduces poverty (Bloom, 2003) and boosts economic growth (Lange and
Vollmer, 2017). Health improvements accelerate the realization of the United Nations
Sustainable Development Goals (SDGs), particularly Goal 1 (no poverty) and Goal 3 (ensuring
healthy lives), through healthcare investment by 2030 (United Nations, 2017).
Economic growth in emerging economies is closely linked to poverty levels, and
healthcare improvements significantly reduce the poverty indices. Studies in Nigeria often yield
mixed results when focusing on the direct nexus between economic development and health,
neglecting the crucial role of poverty reduction. Most studies use HEX as a proxy for human
capital in the context of economic growth. However, increased expenditure does not necessarily
translate into improved health outcomes. This underscores the need for more accurate health
indicators such as LIEX, which directly reflect health improvements and their implications for
economic development. Murthy and Okunade (2009) argue that healthcare improvements
increase life expectancy and reduce morbidity and infant mortality. Additionally, poverty, lack of
access to medical care, lack of health insurance coverage, and increased costs have
contributed to Nigeria's health care and economic development crisis.
This study uniquely contributes to the literature on public healthcare expenditure and
economic development by focusing on Nigeria from 2000 to 2023 (23 years period). The time
series of 2000-2023 is significant in this study given the country's substantial population growth,

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urbanization, and demographic changes impacting healthcare demands and economic

activities. This 23-year period allows for a longitudinal analysis of public health expenditure
trends and economic development over a substantial period, capturing both short-term
fluctuations and long-term trends. This study provides insights into the evolution of public health
expenditure policies over time in response to economic change, crises, and governmental
priorities. The study covers periods of significant health crises (Ebola outbreak between 2014-
2016 and the COVID-19 pandemic, among others). The turn of the millennium in 2000 marked
significant economic reforms in Nigeria, including the National Economic Empowerment and
Development Strategy (NEEDS) in 2003, designed for poverty reduction, wealth creation, and
sustainable and inclusive economic development. The 2000-2023 time series in this study
provides a comprehensive view of the dynamic relationship between public health expenditure
and economic development in Nigeria, offering valuable insights for policy formulation and
decision making.
The COVID-19 pandemic has highlighted the strengths and weaknesses of Nigeria's
health care system, revealing gaps in funding, infrastructure, and preparedness. The impact of
the pandemic on public health expenditures is crucial for understanding both immediate and
long-term economic consequences. The Ebola outbreak between 2014-2016, though
successfully contained, stressed the healthcare system and underscored the importance of
investment in public health infrastructure. Endemic diseases such as malaria, HIV/AIDS, and
tuberculosis continue to burden Nigeria's healthcare system. Understanding how expenditure on
these health challenges influences economic development is crucial.
Empirically, this study adopts the dynamic ARDL model, which considers both small and
finite samples and incorporates both I(0) and I(1) series in the same estimation. Previous
studies have extensively used static models, which cannot account for both short- and long-term
effects. The ARDL approach enhances the precision and reliability of the results, addressing the
gaps ignored by previous studies that have focused on short-term impacts.

LITERATURE REVIEW
Theoretically and empirically, the link between health financing and economic
development is a complex and debated topic with both direct positive and indirect adverse
effects. The endogenous growth model captures the direct positive nexus, while neoclassical
and Keynesian economic theories emphasize indirect adverse effects. The endogenous growth
model reveals that health is a crucial component of human capital. Improved healthcare
services boost productivity, encourage investment in human capital, and drive inclusive growth.
Key theorists such as Romer (1986) emphasize the central role of human capital in this process.

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In contrast, neoclassical and Keynesian theories reveal that public expenditure on health has
adverse effects. Tax increments to fund health investments reduce economic activity and well-
being. According to Keynesian theory, life expectancy increases decrease aggregate demand,
whereas the neoclassical paradigm, as exemplified by Solow (1956), links economic growth to
savings and population, underscoring the role of human capital. Empirical studies on the impact
of HEX and LIEX have yielded mixed results. Some studies show a positive nexus, others an
inverse nexus, and others find ambiguous linkages. Table 1 summarizes the diverse
methodologies and key findings of these studies.

Table 1: Empirical Studies

Authors Scope Methodology Key Findings
Kunze General scope Econometric Life expectancy impact economic growth.
(2014) Analysis
Ngangue and 141 developing Generalized Life expectancy impact economic growth,
Manfred countries (2000- Method of Moments though results varied by income level, being
(2015) 2013) (GMM) insignificant in middle-income countries.
Orisanwa Nigeria (1995- Cointegration, Health expenditure positively impacts
(2015) 2009) Granger Causality economic growth via life expectancy.
Tests
Ogunleye et Nigeria (1981- Ordinary Least Inverse nexus between life expectancy and
al. (2017) 2015) Square (OLS) economic growth.
Bloom et al Life expectancy reduces income inequality
31 countries Empirical Analysis
(2004) and improves economic growth.
Increased health spending improves life
expectancy and under-5 mortality, contributing
WHO (2002) General scope Empirical Analysis
to saving, investment, well-being, poverty
reduction, and economic growth.

This table highlights the inconclusive nature of the relationship between health (life
expectancy) and economic growth, indicating a need for further investigation.

THEORETICAL FRAMEWORK
Traditional growth theories emphasize inputs, such as labor, capital, and savings.
However, the neoclassical model limits the effect of diminishing returns on health. Endogenous
growth theory rejects this limitation by recognizing life expectancy as crucial for long-term
economic growth. Lucas (1998) and subsequent empirical studies (Maddsen, 2012)

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acknowledge health as a core driver of economic growth, treating human capital as fundamental
to production. Health investments boost economic activities and reduce poverty, which Sen
(1999) defines as capability deprivation. Improved health reduces deprivation and fosters
economic development by enhancing human capital.

METHODOLOGY
Research Design
An ex-post facto research design was employed to assess the nexus between the HEX
and economic development using the ARDL model. Unlike other linear models that do not solve
the problem of endogeneity, this method addresses potential endogeneity issues common in
time-series data.

The Data
The datasets were of a secondary nature, sourced from the World Bank Development
Indicators (2023) and the National Bureau of Statistics (NBS) (2023) from 2000 to 2023. This
study uniquely contributes to the literature on public healthcare expenditure and economic
development by focusing on Nigeria from 2000 to 2023 (23 years period). This 23-year period
allows for a longitudinal analysis of public health expenditure trends and economic development
over a substantial period, capturing both short-term fluctuations and long-term trends. It also
provides insights into the evolution of public health expenditure policies over time in response to
economic change, crises, and governmental priorities. The study covers periods of significant
health crises (Ebola outbreak between 2014-2016 and the COVID-19 pandemic), among others.
The turn of the millennium in 2000 marked significant economic reforms in Nigeria, including the
National Economic Empowerment and Development Strategy (NEEDS) in 2003, designed for
poverty reduction, wealth creation, and sustainable and inclusive economic development.

Modeling
Conventionally, output growth in an economy is determined using the growth accounting
equation, which aligns with Lucas’s (1998) endogenous growth model and is supported by
empirical findings (Acemoglu and Johnson, 2007; Maddsen, 2012). This equation incorporates
labor, capital, and human capital, emphasizing the role of health and education as key drivers of
productivity and long-term economic growth, and is expressed as
GDPC = β + a1A + a2V + a3Z + e………………… (Eq 1)
Where, A is the vector of variables explaining growth indicators (initial per capita income, gross
capital formation, and labor force), V is the vector of variables affecting economic growth, Z is

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the vector of control variables such as health expenditure, education expenditure, and e is the
error term (see Omran and Bolbol 2003). To determine the magnitude and size of the health
impact on economic growth from to 2000-2023 (Eq2) is expressed linearly in line (Eq.1)
GDPC = β + a1LIEX + a2HEX + a3EDU + a4LOF + e………………… (Eq 2)
The ARDL is expressed as:
GDPCt = β0 + βiGDPCt-i + δiLIEXt-i + λiHEXt-i + ϒiEDUt-i + ϕiLOFt-i + εt ……………………(Eq3)
ΔInGDPCt = β0 + βiΔInGDPCt-i + δiΔInLIEX-i + λiΔInHEXt-i + ϒiΔInEDUt-i + ϕiΔInLOFt-i
+ λ1InGDPCt-1 + λ2InLIEXt-1 + λ3InHEXt-1 + λ4InEDUt-1 + λ5InLOFt-1 + εt …….. (Eq4)

Error Correction Model (ECM) Equations

ΔInGDPCt = β0 + βiΔInGDPCt-i + δiΔInLIEXt-i + λiΔInHEXt-i + ϒiΔInEDUt-i + ϕiΔInLOF-i +
∞ECTt-1 + εt …… (5)
The ARDL bound test is expressed in (Eq3). The F-statistic value of the bound test was
estimated to assess the presence of a long-run nexus among the variables, as prescribed by
Pesaran et al. (2001). The values of the estimated F-statistics were compared to the upper and
lower critical values.
The ECM captures the long-run nexus between variables; the coefficient indicates the
speed of convergence to the long-run equilibrium from the short-run divergence due to shocks
in the system. We expect the coefficient to be negative and significant following an external
shock. The diagnostic test results include autoregressive conditional heteroscedasticity (ARCH),
Breusch–Godfrey (BG) test for serial correlation, and Jargue–Bera (JB) test for normality.

Table 2: Variable Description and Role in the Study

Variable Description Role in the Study
GDPC Per capita GDP (constant US$) Measures economic performance
LIEX Life expectancy at birth Impacts economic growth positively and
negatively correlate with poverty incidence.
HEX Health expenditure as a % of GDP Control variable
EDU Education expenditure as a % of GDP Control variable
CAP Gross capital formation (proxy for capital) Naturally impacts economic growth positively
LOF Labour force (age 15+ years) Naturally impacts economic growth positively
POV % of the population below the poverty line. Naturally impacts economic growth negatively
Β Constant -
E Error term -
a1-a5 Coefficients (elasticities) Measures changes in GDPC due to changes
in explanatory variables
Source of data: World Bank Development Indicators (2023) and National Bureau of Statistics (NBS) (2023).
Data from World Development Indicators were due to unavailability of some data used for this
study at the country level; however, it is the most dependable source of data.

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RESULTS AND DISCUSSION

The descriptive statistics results in Table 3 for the study variables provide crucial insights
into the nexus between the HEX and economic development in Nigeria from 2000 to 2023. The
mean LIEX in Nigeria is 50.65 years, with minor fluctuations. Negative skewness reveals
improvements in public health expenditures, impacting economic development. The GDP per
capita mean of $1904.237 showed substantial variability, with a standard deviation of 757.2528.
Negative skewness reflects an increase in per capita GDP, boosting life expectancy and overall
economic productivity. The mean value of 3.60% for health expenditure indicates the
government’s commitment to healthcare in recent years for better health outcomes, which, in
turn, can stimulate economic development by creating a healthier workforce. The high mean
value (92.69000%) for the percentage of the population below the poverty line underscores
severe poverty issues in Nigeria, limiting access to healthcare and education and hindering
human capital development and economic growth. The average education expenditure was
significantly high, at 280.9020%, with considerable variability. Gross capital formation (mean
22.67499%) reflects the level of investment in physical assets. The labor force participation rate
was fairly stable, with a mean of 58.97796% and low standard deviation. Negative skewness
indicates relatively stable and consistent labor force participation over time. The series are
largely platykurtic in nature (<3), except for health expenditures, which are mesocratic (3).

Table 3 Descriptive Statistics

LIEX GDPC HEX POV EDU CAP LOF
Mean 50.65718 1904.237 3.602610 92.69000 280.9020 22.67499 58.97796
Median 51.15100 2074.614 3.420693 90.65000 325.1900 21.64707 60.22500
Maximum 52.91000 3200.953 5.053610 98.17000 646.7475 34.10954 60.41000
Minimum 47.19300 565.3060 2.490640 89.50000 39.88260 14.90391 55.27000
Std. Dev. 1.797836 757.2528 0.594286 3.590846 192.4120 6.512596 1.630485
Skewness -0.513971 -0.413258 0.763746 0.635310 0.491283 0.255760 -0.857900
Kurtosis 2.017976 2.272049 3.424873 1.680437 2.088857 1.712309 2.526432
Jarque-Bera 1.852617 1.162499 2.199532 1.398218 1.571166 1.759818 3.036225
Probability 0.396013 0.559199 0.332949 0.497028 0.455854 0.414821 0.219125

Time-series data tend to be non-stationary, meaning that their statistical properties

change over time and may lead to unreliable forecasts. To address this issue, we performed a
unit root test to determine whether the series follows a stochastic trend and to avoid potential
misspecifications before conducting the ARDL estimate, and all data were transformed into their
logarithmic form.

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Unit root test

The Augmented Dickey Fuller (ADF) unit root results in Table 4 show that the series are
stationary at first difference I (1) and level I (0). The mixed stationarity properties of the series
provide our ARDL model with the creditability to test for cointegration. Thus, to meet the Gauss-
Markov conditions for an unbiased estimation,

Table 4: ADF Unit Root Test

Variables ADF Test 0.05% Critical Order of Remark
Statistics Value Integration
LIEX -6.398 -3.673 I (1) Stationary
GDPC -4.032 -3.644 I (0)
HEX -5.758 -3.673 I (1)
POV - 5.810 -3.673 I (1)
EDU -5.424 -3.673 I (1)
CAP - 8.970298 -3.673 I (1)
LOF -7.241 -3.644 I (0)

Cointegration Analysis
The long- and short-run cointegrating nexus effects between HEX and economic
development were assessed, and the results are presented in Table 5, along with the ARDL
bound test. If the calculated ARDL F-statistic bound test exceeds the upper critical bound,
cointegration is established; if it is below the lower critical bound (LCB), cointegration is not
established.

Table 5: ARDL Bound Test Results

Panel A: F-Bounds test
ARDL model (2,0,1,1,0,0)
Test statistic Value Signif. I(0) I (1)
F-Statistics 7.311031 10% 2.407 3.517
K 7 5% 2.910 4.193**
1% 4.134 5.761
Panel B: ARDL Long Run Results
Variables DP = Model Coefficient [Link] T-statistics Prob.
GDPC
C (2,0,1,1,0,0) 7.9104 1.03547 7.6395 0.000**
LIEX 0.6349 0.10849 5.8528 0.0003**
HEX 0.6811 0.1352 5.0373 0.0001**
POV -0.1837 0.7170 -0.256 0.4352
EDU 0.1070 0.3410 0.3139 0.3802
CAP 0.6068 0.3166 1.9164 0.0876
LOF 0.0613 0.0194 3.1522 0.0117

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Other Parament Estimate

2 2
R Adjusted R F-stat DW Prob (F-statistics)
0.99 0.99 578.632 2.01 0.000
Panel C: Diagnostic Tests: The probability values of the F-statistics
BG LM Test BPG Heteroskedasticity
heteroskedasticity ARCH test (1)
Test
0.65 0.64 0.47
Note: *** significance at the 5% level.

Table 6: Short Run Error Correction Estimation (ECM) Model

COINTEQ* -0.727 0.1246 -5.8362 0.0000**
LIEX -0.606 0.1641 -3.6963 0.0022
HEX 0.057 0.0247 2.3037 0.0360
CAP 0.011 0.0059 2.0284 0.0607
Note: *** significance at the 5% level.

The results reported in Table 5, panel A of the ARDL bound test indicate a significant
long-run cointegrating nexus between HEX and economic development in Nigeria, with an F-
statistic of 7.311. This reveals that changes in governmental health expenditures have a long-
term impact on economic development. The long-run results in Panel B support this finding,
showing significant coefficients that demonstrate a robust link between the HEX and economic
development. Specifically, the HEX influences economic development by 0.68%, underscoring
the importance of investing in healthcare infrastructure. This investment enhances human
capital and workforce productivity, and fosters economic development and growth. The
management of the HIV/AIDS epidemic and the Ebola outbreak in Nigeria demonstrates
significant public health responses, and the COVID-19 pandemic further underscores the critical
role of sustained health investments in mitigating economic disruptions. These findings are
consistent with those of Kunze (2014), Onisanwa (2014), Atake (2018) and Piabou and
Tieguhong (2017).
Life expectancy increases economic development by 0.63%, indicating that
improvements in life expectancy reflect better healthcare services, which in turn enhance
workforce productivity and significantly contribute to economic growth. This finding aligns with
endogenous growth theory, which posits that health is a vital component of human capital.
The negative but non-significant impact of poverty on economic development (-0.183%)
reveals deep-rooted structural issues such as high-income inequality and an inelastic economic
response to poverty changes. This finding implies that the other factors are more influential in

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driving economic growth. This effect is consistent with the positions of Omoniyi (2018) and the
World Bank (2019).
The positive coefficient (0.107) of educational expenditure indicates that the quality and
efficiency of educational expenditure are more critical than the amount spent. Improved
educational quality leads to a better skilled workforce, contributing to economic development
and growth.
The positive coefficient (0.06) for gross capital formation indicates that investments in
physical assets such as economic and healthcare infrastructure significantly contribute to
economic development. This finding aligns with both endogenous and neoclassical growth
theories, which emphasize the importance of capital formation in driving economic growth.
Similarly, the labor force coefficient (0.06) indicates that effective population growth
management and increased labor force participation positively, albeit modestly, impact
economic development.
The Keynesian theory captures the indirect and adverse effects of public expenditure on
economic growth, suggesting that tax increases to fund health investments reduce aggregate
demand and economic activity. However, the significant positive impact of health expenditure
indicates that well-targeted public health investments can mitigate these adverse effects and
stimulate long-term economic growth. The ECM results in Table 6 reveal the speed of
convergence (-0.727) from short-run disequilibrium back to long-run equilibrium at the 72% level
annually, with the ECM results being correctly signed, negative, and significant.

THEORETICAL LINKAGES AND STRUCTURAL ISSUES

The long-run results and theoretical linkages emphasize the complex interplay between
HEX, human capital, and economic development. The significant positive impacts of HEX and
LIEX on economic growth underscore the critical role of health care investment in fostering
sustainable development. These findings align with endogenous growth theory, highlighting the
importance of human capital while acknowledging the indirect effects captured by neoclassical
and Keynesian economic theories. Addressing structural issues such as poverty and income
inequality, improving education quality, and maintaining robust investments in physical and
human capital are essential for sustained economic growth in Nigeria.

CONTRIBUTION TO LITERATURE
Existing studies on the link between health financing and economic development in
Nigeria have yielded mixed results. Sharma (2018) and Bloom et al. (2018) reported no
significant nexus, whereas Sede and Ohemeng (2015) and Serag et al. (2019) found a non-

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linear nexus. This inconsistency indicates a gap in the understanding of the exact dynamics
between health expenditure and economic development. Previous studies have primarily
focused on the direct nexus between health expenditure and economic growth without
considering broader contexts, such as the impact of poverty reduction and the role of life
expectancy as a more accurate health indicator. These studies predominantly used static
models such as Ordinary Least Squares (OLS), which are inadequate for capturing both short-
and long-term effects. Failure to account for endogeneity and the dynamic nature of the data
limits the reliability of these findings. Most existing studies do not simultaneously consider the
long- and short-term impacts of health expenditures on economic growth, leading to an
incomplete understanding of the nexus.
This study employed the ARDL approach to assess both short- and long-term effects,
addressing the limitations of static models. This approach improves the precision and reliability
of the results by considering the dynamic nature of the data and endogeneity problem. By
focusing on the period from 2000 to 2023, this study captures significant economic reforms,
demographic changes, and major health crises, providing a comprehensive analysis of the
health-economic growth relationship in Nigeria. Unlike previous studies that primarily used
health expenditure as a proxy for human capital, this study emphasizes life expectancy as a
more direct and accurate indicator of health outcomes and their implications for economic
growth. The integration of the role of poverty reduction in the health-economic growth dynamic
reveals that improvements in healthcare significantly reduce poverty levels and enhance
economic development. This study provides empirical evidence on how major health crises,
such as the Ebola outbreak and the COVID-19 pandemic, impact public health expenditure and
economic development, stressing the importance of sustained health investments. This study
fills critical gaps in the literature by providing a robust and comprehensive analysis of the
relationship between public health expenditure and economic development in Nigeria.

CONCLUSION AND POLICY RECOMMENDATIONS

This study explores the nexus between HEX and economic development in Nigeria,
proposing that life expectancy positively influences economic growth and is contingent on
macroeconomic conditions, particularly poverty levels. Given the significant and positive
influence of HEX on economic development in Nigeria, this study recommends an increase in
healthcare system infrastructure and service investment by funding hospitals, clinics, medical
equipment, and training for healthcare professionals. The positive and significant impact of LIEX
on economic development underscores the importance of improving health care services. This
study recommends focusing on preventive healthcare, vaccination programs, and addressing

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critical health issues, such as maternal and child health, to boost life expectancy. The non-
significant impact of poverty on economic development reveals structural issues such as income
inequality. This study recommends the implementation of targeted poverty alleviation programs
that include healthcare access for the poor to mitigate the indirect effects of poverty on
economic growth. The positive impact of educational expenditure reveals the need to enhance
the quality and efficiency of education through investments in teacher training, curriculum
development, and educational infrastructure to produce a skilled and productive workforce.
The positive gross capital formation nexus reveals the need for investments in physical
assets, including healthcare infrastructure, to significantly drive economic development. The
government should incentivize private and public investments in this sector through tax breaks,
subsidies, and public-private partnerships. This study recommends policies that promote
effective population growth management and increase labor force participation, such as family
planning programs and labor market reforms, which can have modest but positive impacts on
economic development. This study highlights the critical role of health investments during major
health crises such as the Ebola outbreak and the COVID-19 pandemic. The government should
develop contingency funds and strategic plans to ensure sustained healthcare funding during
emergencies and to mitigate economic disruptions. By implementing these policy
recommendations, Nigeria can enhance its economic development trajectory through strategic
investments in healthcare and human capital, while addressing underlying structural issues and
preparing for future health challenges. For further research, this study recommends a
comparative study of Nigeria's healthcare and economic performance with other countries
facing similar challenges. Exploring regional disparities in healthcare access and economic
development in Nigeria using longitudinal analysis. By addressing these areas, future studies
can deepen the understanding of the healthcare-economic development nexus in Nigeria and
inform targeted policy interventions for sustainable development.

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