The Effect of Private and Public Health Expenditure on Infant Mortality Rates: does the level of development matters?

Does health expenditure reduce infant mortality rates (IMRs)? To answer such important question we disaggregate health expenditure into private and public and divide the countries into two groups according to their level of development (income). The results obtained from employing OLS and panel data techniques on 160 countries show strong negative relation between health expenditure and IMRs. However, we find that this effect is channelled through public expenditure at low development levels and through private expenditure at high development stages. Our results are robust across different estimation methodologies. We also find strong negative relationship between IMRs and per capita income and female education. The effect of the environment variable is statistically weak. Correspondence: Economics Department, James Callaghan Building, University of Wales Swansea, Singleton Park, Swansea, SA2 8PP, UK. Tel: 44 (0) 1792 299 644, Fax: +44 (0) 1792 295 872, Email: [email protected]