The Relationship between Environmental Performance Index, Economic Growth and Public Health Expenditures: Panel Cointegration Approach

Economic growth has a direct impact on public health expenditures; also, itindirectly affects public health expenditures through the environment’s quality. Therefore,this study aimed to investigate the relationship between environmental performance index,economic growth, and public health expenditures in countries with high and very highhuman development index. The present descriptive-analytical and applied study was performed on 16 countrieswith high and very high human development index. The time-series data required for theyears 2006-2018 were extracted from the World Bank and United Nations database andenvironmental performance index extracted from the Yale University website. Im, Pesaranand Shin (IPS), Levin, Lin, and Chu (LLC), Augmented Dickey–Fuller (ADF)– Fisher, andPhillips-Perron (PP)–Fisher tests for stationary and Pedroni and Kao tests for cointegrationwere used. The study model was estimated by the DOLS cointegration method in Eviews 10software. The mean environmental performance index for selected countries with very highand high human development index was 79.04 and 64.71, respectively; also, the elasticity ofpublic health expenditures to gross national production, environmental performance index,physician supply, and urbanization ratio were 0.96, -2.41, 0.441 and 0.448, respectively. Increasing economic growth, urbanization ratio, and physician supply hada positive effect, and improving environmental performance index had a negative effecton public health expenditures. Therefore, to reduce public health expenditures, policiesare recommended to maintain environmental sustainability and reduce environmentalpollutants, and to invest in advanced equipment to purify pollutant gases. Maintaining andincreasing economic growth is also essential for adopting policies to increase physicians andinvest in health infrastructure.