Public Health Investment, Private Health Investment And Economic Growth

According to the perspectives of new theory of economic growth, differences in initial human capital is a source of leading to differences in economic growth in each country and regions. Over the times, this difference will also continue to expand, health and education is the most important categories among all forms of human capital, the views that education human capital Indirectly effects on economic growth through influencing on technological advances has been confirmed by the majority of scholars, its theoretical research and experience analysis has reached a mature level basically. With the improvement of economic level in development and quality in people’s life, more and more people are looking forward to a healthy body, the views that health is the most happiness in people’s life has been realized by more and more people, based on this, more and more countries and regions would put the health of the citizens in its prime location. Meanwhile, with the improvement of relevant statistical indicators and statistical methods, health Human capital which has been in the position of academic edge has became a hot issue which Economist concern about after education human capital, the views that health investment crowding-out effect on the accumulation of physical capital has been Consensus in academia, However, most of the existing theoretical models only emphasized on health investment in the sense of general which crowds to the accumulation of physical capital, there are a few literature distinguishes between public health investment and private health investment crowding-out effect on their accumulation of physical capital. However, from the perspective of both in combination to study the overall effects on accumulation of physical capital from public health investment and private health investment. the literature in this area is rare. Meanwhile, in the issues of impacts on economic growth, the existing literature rarely in the perspective of a combination of both to study the impacts of proportion of public health investment and private health investment on economic growth.Based on previous literature, This paper assumes that private and government invest respectively in health in two different periods at a framework of a two-period OLG model and introduce the spread "spillover effect" of public health investment to health human capital function of the elderly, by comparative static, steady-state and dynamic comprehensively analyze the overall effects of public health investment and private health investment on accumulation of physical capital. The second part of the theoretical model firstly analyzes the impacts of private health investment on the optimal growth by building an expanded Lucas human capital accumulation model under a framework of two departments with physical capital, health human capital and the results shows that a relationship which is similar to a U-shaped curve which increase after the first decreasing exists between the allocated proportion of personal income on health expenditures and optimal growth rate and only when the allocated ratio exceeds the share that health human capital contributes to the output can promote economic growth when increase Private health investment. based on this, the paper also turn the government department into the model, and expands the basic model from a perspective of ratio of public health investment and private health investment. The results shows that a relationship of U-shaped curve also exists between the ratio of public health investment and private health investment and optimal growth rate. We have also discussed the influence of the ratio of public health investment and private health investment and the allocated proportion of personal income on health expenditures to dynamic characteristics of the model. Empirical part of the paper shows that the ratio of public health investment and private health investment in our country is now in the rising phase of the relationship between economic growth by the method of fixed-effects and random effects in the basis of panel data of31provinces in our country from2001to2012; the improved labor quality by increasing public investment in health is the main reason for economic growth in our country in the past decades.