Nobody can deny the importance of health as an elementary right for life. Health is a kind of enablement that gives significance to human life. It will emphasize individual growth capability and economic security for the individuals and families (Boussalem et al., 2014). In all developing countries since the 1960s, a considerable fear from the increasing proportion of GDP dedicated to health care costs and expenses. Consequently, much research has been stressing on the investigation of the factors that add to increases in health care expenditure.
The element that has been recognized as the most significant is real GDP (Haider, 2007). Many reasons for the claimed positive relationship between GDP, and the amount spent on health care services. Firstly, increased earnings mean that there is more cash to expend on health in public and also private sectors. Secondly, the larger the health expenditure the better health status, which may in turn lead to higher earnings. Workers in good health are more able to product and less susceptible for being in sick leave. Therefore, the economy and individuals themselves have more income.
This suggests that the causal relationship between health expenditure and GDP may be in either or both directions (Haider, 2007). To be able to study the relationship between health and national GDP, it is crucial to understand the idea of health in a general view. Health is not only the lack of diseases; it is also the ability of people to improve to their best during their whole lives. Actually, health is an asset individuals own, with an intrinsic value which is being healthy is a very important source of well-being as well being as instrumental value ( Peykarjou, 2011). A lot of research has been carried out after kleiman and Newhouse who started to study correlation between GDP and healthcare expenditure since 1974.
This study will be conducted to review the main literature about GDP, and the effect of health care expenditure on GDP. In this part, the review of related researches and studies of concerning GDP, its definition, factors affecting it and national accounts. Health expenditure, How was defined and analyzed regarding its components, factors as well as determinants of it. Finally the relation between Health expenditure and GDP is thoroughly studied in order to figure out if spending money on health is affecting the national GDP or health is luxury and resource consuming aspect only.