The Role of Government Health and Education Expenditure on Economic Growth in Iran and OPEC Countries


Department of Economics, Faculty of economics and Social Science, Shahid Chamran University of Ahvaz, Khuzestan, Iran.


Economic growth is one of the goals of development in the economic plans of every country. Achieving self-development in OPEC member takes precise awareness of the amount and cause of the impact of economic variables on each other and it is, determining the policies and efficient, appropriate strategies for each case. Among these variables, oil revenues, total government expenditure, government expenditure for education, government expenditure for health, and economic growth could be mentioned. An examination of the trend of changes in health expenditure in Iran shows up until 2011. After that, there has been a leap in these expenditures. The share of government education expenditure in the total government budget in Iran has been showing a steady decline in these expenditures. panel data, we study the relationship between health expenditure and education expenditure and economic growth in OPEC countries and Iran from 2004 to 2016. Hence, the panel data method has been applied to estimate models and the panel VAR method has been applied to examine the causality relationships between variables. The results show a positive meaningful relationship between oil revenues, total government expenditure, government expenditure for education, government expenditure in health, and economic growth of OPEC countries and Iran. Furthermore, the result of the Granger Causality test suggests that there is a practical, mutual relationship between oil revenues and economic growth, total government expenditure and economic growth, and also a practical one-sided relationship of economic growth with government expenditure for education and also one-sided relationship of economic growth with government expenditure for health in OPEC countries and Iran.


Abdullah, H. A. (2000). The Relationship between Government Expenditure and Economic Growth in Saudi Arabia. Journal of Administrative Science, 12(2), 173-191.
Ademola, I. S., Olasode, O. S., & Raji, O. A. (2015). Government Expenditure, Oil Revenue, and Economic Growth in Nigeria. International Journal of Economics, Commerce and Management, 3(5), 180-202.
Afonso, A., & Tover Jalles, J. (2011). Economic Performance and Government Size. Working Paper Series. 1399, 4-29.
Aghion, P., Caroli, E., & Garcia-Penalosa, C. (1999). Inequality and Economic Growth: The Perspective of the New Growth Theories. Journal of Economic Literature, 37(4), 1615-1660.
Al-Yousif, Y. (2000). Does Government Expenditure Inhibit or Promote Economic Growth: Some Empirical Evidence from Saudi Arabia. Indian Economic Journal, 48(2), 92-96.
Barro, R. J. (1990). Government Spending in a Simple Model of Endogenous Growth. Journal of Political Economy, 98(5), 103–125.
Benhabib, J., & Spiegel, M. M. (1994). The Role of Human Capital in Economic Development, Evidence from Aggregate Cross-Country Data. Journal of Monetary Economics, 34(2), 143-173.
Bryant, J. (1969). Health and the Developing World. Ithaca, NY: Cornell University Press.
Castello-Climent, A. (2008). On the Distribution of Education and Democracy. Journal of Development Economics, 87(2), 179-190.
Castello-Climent, A., & Domenech, R. (2008). Human Capital Inequality, Life Expectancy, and Economic Growth. The Economic Journal, 118(528), 653-677.
Cooray, A. (2009). Government Expenditure, Governance, and Economic Growth. Comparative Economic Studies, 51(3), 401-418.
Devarajoun, S., Swaroop, V., & Zou, H. F. (1996). The Composition of Public Expenditure and Economic Growth. Journal of Monetary Economics, 37, 313-344.
Devlin, J., & Lewin, M. (2004). Managing Oil Booms and Busts in Developing Countries. Draft Chapter for Managing Volatility and Crises, a Practitioner's Guide, Retrieved from
Elmi, Z., & Jamshidnezhad, A. (2007). The Effect of Education on Economic Growth in the Years 2003- 1971. Journal of the Faculty of Humanities and Social Sciences, 7(26), 135-154.
Emadzadeh, M., Samety, M., & Safi, D. (2011). The Relationship between Health Expenditure and Economic Growth in the Provinces of Iran. Health Information Management, 7(7), 918-928.
Farzanegan, M. R.  )2011). Oil Revenue Shocks and Government Spending Behavior in Iran. Energy Economics, 33, 1055–1069.
Glaeser, E. L., Laporta, R., Lopez-de-Silanes, F., & Shleifer, A. (2004). Do Institutions Cause Growth? Journal of Economic Growth, 9(3), 271-303.
Golmoradi, H., & Anjamashoa, S. (2016). Short-Term and Long-Term Effects of   Government Spending and Inflation on Economic Growth. Quarterly Financial and Economic Policies of the Third Year, 10, 108-189.
Hamdi, H., & Sbia, R. (2013). Dynamic Relationships between Oil Revenues, Government Spending, and Economic Growth in an Oil-Dependent Economy. Economic Modelling, 35, 118–125.
Hanushek, E. A., & Woessmann, L. (2008). The Role of Cognitive Skills in Economic Development. Journal of Economic Literature, 46(3), 607-668.
Javaid Attari, M. I., & Javed, A.Y. (2013). Inflation, Economic Growth, and Government Expenditure of Pakistan Procardia. Economics and Finance, 5, 58 – 67.
Lipset, S. (1960). Political Man: The Social Bases of Politics. New York: Doubleday.
Olomola, P. A. (2006). Oil Price Shock and Aggregate Economic Activity in Nigeria. African Economic and Business Review, 4(2), 48-61.
Owoeye, T., & Adenuga, D. (2005). Human Capital and Economic Development: An Empirical Analysis of a Developing Economy (1970-2000). Working Papers, Annual World Bank, Retrieved from
Panahi, H., & Ale Imran, A. (2016). The Effect of Government Health Spending on Economic Growth in Countries of the Organization for Economic Cooperation Group D8. Journal of Health and Development, 4, 336-327.
Ranjan, K. D., & Sharma, C. (2008). Government Expenditure and Economic Growth: Evidence from India. The IUP Journal of Public Finance, 3, 60-69.
Sorkin, A. (1977). Health Economics in Developing Countries, an Economic Perspective. Lexington: Lexington Books.
Wang, K. M. (2011). Health Care Expenditure and Economic Growth Quintile Panel –type Analysis. Economic Modeling, 28(4), 1536-1549.
Weil, D. N. (2005). Accounting for the Effect of Health on Economic Growth. National Bureau of Economic Research, NBER Working Papers, Retrieved from