The interface between economic growth, carbon emissions, and health in the Asia-Pacific region: Analysis of unobserved distributional heterogeneity

The increasing nexus between economic growth and the resultant environmental and health challenges are of particular concern for developing countries. However, there is less evidence on the net effect of economic growth (EG) on air pollution, health spending, or vice-versa in the Asia-Pacific region. Therefore, this study explores important research questions: (a) Whether there exists any simultaneous relationship between Gross Domestic Product (GDP) per capita (a proxy for EG), carbon dioxide (CO2) emissions per capita, and health expenditure (HE) per capita?; and (b) Does there exist any unobserved distributional heterogeneity across the Asia-Pacific region that influence the elasticity? To address these questions, we examine the interface between GDP per capita, CO2 emissions per capita, and HE per capita in 52 countries from the Asia-Pacific region for the period 2000-2014 using bootstrapping fixed-effects (FEs) quantile regression model. Our results show that there is a variation in distributional effects between HE, EG, and CO2 emissions. By and large, there is a positive relationship between HE, EG, and CO2 emission across quantiles, though the coefficient values differ, and elasticity could be greater or lesser than one. It is also observed that growth raises health spending and increases pollution in lower-income countries. On the contrary, income growth also promotes the adoption of green technology, reduces pollution, improves population health, and reduces healthcare spending in higher income countries. The study brings out some important suggestions from public policy perspectives to streamline the healthcare and sanitation sectors, and environmental quality across countries as integral aspects of sustainable growth strategies and the achievement of the United Nations SDG Agenda 2030. The findings and suggestions assume added significance in the post-pandemic COVID-19 scenario, as it calls for revamping the healthcare management systems across countries.