Effects of economic development and health expenditure on health outcomes in sub-Saharan Africa: Is there a threshold?

Purpose This paper examines the effect of economic development and health expenditures on underreported health outcomes in sub-Saharan Africa and identifies the critical thresholds at which these effects are most pronounced. Design/methodology/approach The study utilized panel data from 1996 to 2021 and applied the instrumental variable two-stage least squares (IV-2SLS) estimator to address endogeneity issues often associated with panel data. Findings The effectiveness of economic development reaches a threshold, becoming less effective beyond a per capita GDP of $1,033.61 for HIV infections and $1,501.81 for malaria infections. Similarly, the effectiveness of health expenditure encounters diminishing returns at thresholds of $83.03 per capita for HIV and $119.25 per capita for malaria. Research limitations/implications Given that most economies in the subregion fall below these estimated thresholds, the implications are clear—stimulating economic development and allocating resources to the health sector would yield substantial benefits in enhancing health outcomes. Originality/value Our study contributes significantly to the literature by identifying the critical thresholds at which the positive impact of economic development and health expenditures on health outcomes starts to diminish. Peer review The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-08-2024-0648.