ANALYZING THE ROLE OF HEALTH EXPENDITURE IN DRIVING INDONESIA'S ECONOMIC GROWTH
DOI:
https://doi.org/10.65886/ijde.v2i02.28Keywords:
Public Goods, Health, Economic GrowthAbstract
Abstract
This study analyzes the effect of budget realization of health deconcentration funds and the percentage of population with health insurance on the growth of Gross Domestic Product (GDP) per capita at the provincial level in Indonesia. Investment in public health is believed to be a catalyst for long-term economic growth because it can increase labor productivity, reduce mortality, and extend life expectancy. While some previous studies have shown a positive relationship between public health expenditure and GDP, the context of fiscal decentralization and the post-pandemic recovery period require specific analysis.
The present study employs a quantitative approach, utilizing an explanatory method and panel data from 33 provinces in Indonesia for the period 2021-2023. The dependent variable in this study is provincial GDP per capita, while the independent variables are the logarithm of health deconcentration fund realization and the logarithm of the percentage of population with health insurance. The analysis was conducted using the Fixed Effect Model (FEM) panel regression model.
The regression results show that the realization of health deconcentration funds and the percentage of population with health insurance have a positive and significant relationship with GDP per capita growth in the provinces of Indonesia.
This finding is consistent with endogenous growth theory and supports the crucial role of health investment as an economic driver, especially in the post-pandemic recovery phase. Policy implications suggest that provincial governments need to continue to increase budget allocations and expand health insurance coverage efficiently and strategically. This is not only to improve social welfare, but also as a vital instrument to accelerate sustainable regional economic growth.
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