Medicine and democracy: The importance of institutional quality in the relationship between health expenditure and health outcomes in the MENA region

• We analyze the effects of health expenditure on health outcomes in the MENA region.
• The crucial role of institutional quality is highlighted.
• We show that the effect of health spending depends on the efficiency of institutions.

Evidence suggests that the effect of health expenditure on health outcomes is highly context-specific and may be driven by other factors. We construct a panel dataset of 18 countries from the Middle East and North Africa region for the period 1995–2012. Panel data models are used to estimate the macro-level determinants of health outcomes. The core finding of the paper is that increasing health expenditure leads to health outcomes improvements only to the extent that the quality of institutions within a country is sufficiently high. The sensitivity of the results is assessed using various measures of health outcomes as well as institutional variables. Overall, it appears that increasing health care expenditure in the MENA region is a necessary but not sufficient condition for health outcomes improvements.