Trade in health products and population health: A long-run relation

Abstract

The effect of trade on different economic outcomes has been extensively studied but the literature on the specific effects of trade on health outcomes has remained relatively scanty. Our paper fills in the gap by examining the long-run association between import expenditures on health products and longevity in a cross-country panel setting of 32 developed and 24 developing countries, covering 1990–2018. It accounts for both time-series properties and cross-country heterogeneity, while remaining robust to omitted variables and endogeneity problems, by applying panel cointegration techniques. The results reveal that per capita medical import expenditure on pharmaceuticals, aggregate medical products and medicines have contributed around 0.34, 0.35 and 0.30 percentage points, respectively to the annual increase in life expectancy for an average country in our sample. The findings suggest that higher per capita import expenditure on health products can increase longevity significantly in the long-run. The results remain robust to cross-sectional dependence, sub-samples of developed and developing countries and alternate measures of health outcomes such as adult mortality rates. These findings set the context for treating health product imports as critical for long-term improvements in population health and outlines the need for greater coordination between health and trade policymakers for improving population health.