Health Expenditures Indicator


This indicator measures the government’s commitment to investing in the health and well-being of its people.

Relationship to Growth & Poverty Reduction

MCC generally strives to measure outcomes rather than inputs, but health outcomes can be very slow to adjust to policy changes. Therefore, the Health Expenditures indicator is used to gauge the extent to which governments are making investments in the health and well-being of their citizens. 1 A large body of literature links improved health outcomes to economic growth and poverty reduction. 2 While the link between expenditures and outcomes is never automatic in any country, it is generally positive when expenditures are managed and executed efficiently. 3 Research suggests that increased spending on health, when coupled with good policies and good governance, can promote growth, reduce poverty, and trigger declines in infant, child, and maternal mortality. 4


This indicator measures general government health expenditure (GGHE) as a percentage of Gross Domestic Product (GDP). General government health expenditure includes outlays earmarked for health maintenance, restoration or enhancement of the health status of the population, paid for in cash or in kind by the following financing agents: central/federal, state/provincial/regional, and local/municipal authorities; extrabudgetary agencies, social security schemes; and parastatals. All can be financed through domestic funds or through external resources (mainly as grants passing through the government or loans channeled through the national budget). GGHE includes both recurrent and investment expenditures (including capital transfers) made during the year. The classification of the functions of government (COFOG) promoted by the United Nations, the International Monetary Fund (IMF), OECD and other institutions sets the boundaries for public outlays. Figures are originally estimated in million national currency units (million NCU) and in current prices. GDP data are primarily drawn from the United Nations National Accounts statistics.


  • 1. Becker, Loren, Jessica Pickett, Ruth Levine. 2006. Measuring Commitment to Health: Global Health Indicators Working Group Report. Washington D.C.: Center for Global Development.
  • 2. Bloom, D. E., Canning, D., Sevilla, J. 2004.The Effect of Health on Economic Growth: A Production Function Approach. World Development 32(1): 1–13. Alok Bhargava, Dean T. Jamison, Lawrence J. Lau and Christopher J. L. Murray. 2001. Modeling the Effects of Health on Economic Growth. Journal of Health Economics 20(3): 423–40. Baldacci, E., Benedict Clements, Sanjeev Gupta and Qiang Cui. 2004. Social Spending, Human Capital and Growth in Developing Countries: Implications for Achieving the MDGs. IMF Working Paper 04/217. Gyimah-Brempong K. and M. Wilson. 2004. Human Capital and Economic Growth in Sub-Saharan Africa and OECD Countries. Quarterly Review of Finance and Economics 44: 296–320.
  • 3. Filmer, D. and Pritchett, L. 1999. The impact of public spending on health: Does money matter? Social Science & Medicine 49 (10):1309–23. Filmer, Deon, Jeffrey S. Hammer, and Lant Pritchett. 2000. Weak Links in the Chain: A Diagnosis of Health Policy in Poor Countries. World Bank Research Observer 15 (2):199–224. Castro-Leal, F., J.Dayton, L. Demery, and K.Mehra. 1999. Public Social Spending in Africa: Do the Poor Benefit? World Bank Research Observer 14(1):49–72. Keefer, Philip and Stuti Khemani. 2005. Democracy, Public Expenditures, and the Poor: Understanding Incentives for Providing Public Services. World Bank Research Observer 20 (1): 1–27.
  • 4. Baldacci, E., Benedict Clements, Sanjeev Gupta and Qiang Cui. 2004. Social Spending, Human Capital and Growth in Developing Countries: Implications for Achieving the MDGs. IMF Working Paper 04/217. Ghobarah, Hazem Adam, Paul Huth, and Bruce Russett. 2004. Comparative Public Health: The Political Economy of Human Misery and Well-Being. International Studies Quarterly 48:73–94. Gupta, I. and Mitra, A. 2004. Economic Growth, Health and Poverty: An Exploratory Study for India. Development Policy Review 22(2): 193–206. Houweling, Tanja AJ, Caspar, Anton E Kunst, Looman, WN, and Mackenbach, Johan P. 2005. Determinants of under-5 mortality among the poor and the rich: a cross-national analysis of 43 developing countries. International Journal of Epidemiology 34(6): 1257–1265. Gupta, S., M. Verhoeven, and E. R. Tiongson. 2003. Public spending on health care and the poor. Health Economics 12(8): 685–96. Bidani, B., and M. Ravallion. 1997. Decomposing Social Indicators Using Distributional Data. Journal of Econometrics 77(1): 125–139. Wagstafff, A. 2003. Child Health on a Dollar a Day: Some Tentative Cross-Country Comparisons. Social Science Medicine 57(9): 1529–1538. Rajkumar, A.S. and V. Swaroop. 2002: Public Spending and Outcomes: Does. Governance Matter? World Bank Policy Research Working Paper 2840.