Short-term and Long-term Impacts of Foreign Direct Investment on the Development of Iran’s Health Sector

The health sector (health care sector) is considered one of the key sectors in every country and is known as an infrastructure in economic development since the factor directly affects labor productivity and increases production and economic growth. Thus, the health system’s quality may be considered a crucial and attractive factor of foreign direct investment (FDI) along with infrastructures like education, labor, and research and development costs.

The present study evaluated the short-term and long-term impacts of foreign direct investment on the development of the health sector.

According to the time series data, the ARDL method tests the research hypotheses from 1981 to 2020. The present method can use data of nature I (0) and I (1) simultaneously.

During the years 1982 to 2021 with the increase of foreign capital in the health sector of Iran, health indicators have changed significantly. The rates of some diseases have decreased and in the meantime, the financial resources needed for the health sector have been provided to some extent. According to the coefficients, the highest impact on health expenditures in the short term, foreign directs investment and the lowest impact on the percentage of people living with AIDS.

The research findings indicate that foreign direct investment has had positive and significant impacts on the development of the health sector in Iran in both the short and long terms.