Economic growth and the geographic maldistribution of health care resources: Evidence from China, 1949-2010

- We use a dynamic convergence model that controls provincial heterogeneity and spatial dependence to test whether the geographic distribution of health care resources is convergent or divergent in the long run, while at the same time seeking to determine the role that economic growth plays in this process.
- Based on provincial-level panel data for China covering the period 1949-2010, the empirical results provide much support for β-convergence in that the provinces with lower initial values for health care resources, including the densities of physicians and hospital beds, are seen to grow faster and to catch up with the provinces with higher initial stocks.
- In addition, we find that GDP per capita has a significant and non-linear impact on the convergence rate of health care resources, which provides support for the “health care Kuznets curve” hypothesis in China.
- Our study suggests that economic growth per se provides a built-in stabilizer to mitigate health inequality through the convergence of health care resources, and that a de-regulation of China's health sector, such as removing entry barriers for hospitals or relaxing wage regulations for health care workers, is beneficial to speed up the convergence process.

The geographic maldistribution of health care resources is one of the most persistent characteristics of health care systems around the world. Based on China's provincial-level panel data in 1949-2010, this paper empirically investigates whether the geographic distribution of health care resources is convergent or divergent in the long run and whether the rapid economic growth contributes to reducing the regional disparity in health care resources in China. Using a dynamic convergence model that controls unobserved provincial heterogeneity and spatial dependence, the empirical results provide much support for β-convergence in that the provinces with lower initial values of health care resources, including the densities of physicians and hospital beds, are seen to grow faster and to catch up with the provinces with higher initial stocks. In addition, we find that GDP per capita has a significant and non-linear impact on the convergence rate of health care resources, providing support for a Kuznets curve in China's health sector. That is, the inequality in the distribution of health care resources follows an inverted “U” shape as income increases over time. An important implication of our study is that economic growth per se provides a built-in stabilizer to mitigate health inequality through the convergence of health care resources across regions in the long run.