THE IMPACT OF RELIGIOUS HETEROGENEITY AND DEMOCRACY ON PUBLIC HEALTH EXPENDITURE: A PANEL CROSS-COUNTRY ANALYSIS

Abstract

Public health expenditure is an important financial mechanism involve in maintaining and improving the public’s health. Most spending relates to providing long-term care, curative or rehabilitative care, medical goods and preventive care. Therefore, the provision of public health service is essential for socio-economic development. Despite the links between public health expenditure and ethnic heterogeneity having been intensively studied, very little effort has been devoted to investigating the combined effects of democracy and ethnic heterogeneity on public health expenditure. Religious differentiation can lead to different policy preferences among the people; thus, democratic governments might devote greater resources in order to address the preferences of each group. The purpose of this paper is to investigate the effects of democracy and ethnic heterogeneity on public health expenditures. Using the GMM method developed by Arellano and Bond (1991) and data covering 124 countries for the period 1995 to 2015, we investigate whether a democratic country would devote larger public health expenditures in the presence of ethnic heterogeneity. Using this approach, the results indicate that the presence of ethnic heterogeneity in democratic country may lead to an increase in public health expenditure.