LITERATURE REVIEW
2.1Introduction
This chapter presents literature review related to public health expenditure and economic growth. The chapter’s objective is to present a logical sequence of this study’s research questions. It captures both theoretical and empirical literature. The empirical literature captures the studies related to growth rate of GDP and public expenditure of healthcare. It also highlights various policies that have been developed relating to public health. On the other hand, the theoretical literature presents public expenditure theories that are used in providing platform to discuss issues of public expenditure on healthcare and economic growth that is relevant in this study. This chapter concludes by giving an overview of the literature reviewed. Impact of Economic Growth on Public Healthcare Expenditure Essay
2.2Recent Economic Trends
Globally, the statistics have shown that economic growth slugged especially in 2019/2020 financial year. The slug has been contributed by several factors and one of them being the COVID-19 pandemic (McKibbin and Fernando, 2020). The disease has had far-reaching effects even beyond the spread of the disease itself and the efforts to contain it by initiating quarantine. As the virus spread round the globe, concerns have changed from issues relating to supply-side manufacturing to a witnessed decrease in service sector of the business (Fernandes, 2020). As far as history is concern, the pandemic has caused the largest global recession, as more than third of the world’s population put on lockdown. As at June 2020, the Global Economic Prospects has described the near-term overview of the effects of the pandemic and the long-term damages it has done to growth (McKibbin and Fernando, 2020). Using the market exchange rate weights, it was envisioned that the global GDP growth rate would contract by 5.2 percent, despite the tireless efforts put in place by governments to downturn it with various fiscal and monetary policies. Impact of Economic Growth on Public Healthcare Expenditure Essay
The global decline in GDP has not left UK unaffected. UK has had its own series of economic shocks since Great Slump of c. 1430 to c. 1490. In 1706, the country too experienced a War of the Spanish Succession that reduced the GDP growth by 15 percent. This war came out as a result of compounded failure of the harvest. This was followed by the Great Frost in 1709 that led too to failure of harvest brought about by Great Frost. This was followed by a series of depressions that included long depression of 1873 – 96 and the one from 1919 – 26 led by World War 1. The Great Depression of 1930 was led by US reducing the demand for the UK exports which took UK 16 quarters in order to recover. Another recession occurred in 1956 when there was uncompetitive motor industry, the squeezing of credit caused by high bank rates as well as inflationary pressures. In the Mid-1970s stagflation due to oil crisis affected UK. The inflation rate during this time went as high as 24.2 percent in 1975. The Great Recession of 2008 too led to unemployment and economic growth in UK. Recently, the COVID – 19 pandemic has reduced the GDP growth rate of UK by 20.4 percent as of Quarter 1 (Q2). Impact of Economic Growth on Public Healthcare Expenditure Essay
However, despite the shocking factors, the World Bank group (2018) indicated that the nominal GDP of the country increased from $2.66 Trillion in 2017 to $2.861 Trillion in 2018. However, it slightly dropped to $2.827 trillion in 2019. The growth was led by several factors that include technological advancement, improvement in infrastructural development and reduction in inflation rates. Despite the increment in cost of living, the government has been increasing its allocations to the social sectors such as education and health. The figure below clearly shows the healthcare expenditure as percentage of economic growth in UK.
Figure 2: PHE as a percentage of GDP, 2000 to 2019 Impact of Economic Growth on Public Healthcare Expenditure Essay
Recent Health Trends
UK like any other country has been experiencing hard times despite its improved health status witnessed by a rising life expectancy of its population. According to Department of Health and Social Care (2018), the health system of the country has delivered a good health outcome as compared to scale of income inequalities. The department also indicated the improvement National Health Service (NHS) that, the time that patients stay in the hospital has fallen significantly and the rate at which hospital services are utilized is 25 percent below the EU average. This witness efficiency in the healthcare facilities.
The recent decades have witnessed several improvements in many early-years of health. These include reduction of teenage conceptions, infant’s deaths, proportions of newborns with