Health expenditure, governance and SDG3 nexus: a longitudinal analysis in BRICS economies.

Abstract

Background: Achieving Sustainable Development Goal 3 (SDG3): good health and well-being, requires significant health investments and effective governance. While many studies explored the influence of health expenditure and governance, little is known about how different levels of governance affect the relationship between health expenditure and SDG3 in a globalised world. Thus, this study aims to fill that gap by examining the marginal effects of health expenditure on SDG3 under varying levels of governance in BRICS economies.

Methods: This study uses quantitative data spanning a panel of 2000-2023 years. Governance is measured using worldwide governance indicators, while health spending is represented by current health costs, government health costs, and private health costs from the World Development Indicators. Data on SDG3 comes from the SDG Index. Cross-sectional dependency, stationarity and cointegration tests are employed to choose appropriate panel data models. The final results are obtained using Fully Modified OLS, while System GMM is used to address issues like endogeneity, autocorrelation, instrumentation, and causality. To ensure the results are reliable, the study also tests alternative measures of governance.

Results: 1% increase in current and government health spending improves SDG3 by 3.92% and 2.86%, respectively, while a 1% rise in private health spending reduces it by 0.677%. This negative impact in BRICS nations is likely due to market failures in private healthcare, where profit-driven models limit access and efficiency. The positive impact of current and government health expenditure on health outcomes is comparatively weaker at lower levels of governance but private health expenditure and SDG3 are weakening by governance at different levels which is indicative of inefficiencies in resource allocation and implementation. This study supports institutional theory, which states that strong governance improves the effectiveness of public health spending, leading to better health outcomes. The study highlights how the geopolitical prominence of governance frameworks interacts to optimise the benefits of health investments, demonstrating their role as leaders in advancing global health initiatives. Thus, policymakers need an integrated approach in health investments with institutional reforms in achieving health outcomes more effectively as good governance significantly amplifies the relationship.

Conclusions: This study highlights that governance plays a key role in improving the impact of health spending on SDG3. Strong governance boosts the benefits of public health expenditure and limits the negative effects of private health expenditure. Thus, the findings stress the importance of effective governance in enhancing health outcomes in BRICS economies.