Government Healthcare Expenditure and Economic Growth In Nigeria: Evidence from an ARDL Approach

Abstract

This study examined the impact of government healthcare expenditure on economic growth 
in Nigeria for the period of 1984 to 2025. The study employs time-series econometric 
Techniques using the Autoregressive Distributed Lagged Model (ARDL) to investigate the 
dynamic short- and long-run relationships and determine the impact of healthcare 
expenditure on economic growth. The unit root analysis of the data revealed that the data 
were integrated of order I(0) and I(1), which justifies the use of the ARDL framework. The 
cointegration test (Bounds Test) revealed that the variables have a long-run relationship. The 
results of the analysis revealed that, in the long run, domestic health expenditure has a 
negative and insignificant effect on economic growth, while foreign health expenditure has a 
negative, statistically significant effect on economic growth. Life expectancy, however, had a 
positive and significant effect on economic growth. In the short run, domestic health 
expenditure negatively and significantly affected economic growth. In contrast, foreign health 
expenditure and life expectancy positively and significantly influenced economic growth. The 
error correction term was negative and statistically significant, confirming the existence of a 
stable long-run relationship among the variables. The study therefore recommends increased 
and efficient healthcare funding, improved accountability in the health sector, reduced 
reliance on foreign healthcare financing, and policies to improve life expectancy and 
healthcare outcomes in Nigeria.