The effect of health expenditures on tourism: Panel Data Analysis on OECD countries

In this study, the effects of countries' health expenditures on international tourism receipts between 2008 and 2019 were empirically examined using panel data estimation methods. Since the current year's health expenditures are not expected to have an immediate impact on tourism receipts, health expenditures for the past two years are also included in the model. In addition, life expectancy, which represents the health risk for the longevity of countries, and GDP per capita, which represents economic indicators such as individual welfare, are included in the model. The dependent variable of the established model is tourism receipts because of its substantial effect on the current account deficit problem, import dependency, and foreign exchange income. Thus, as a result of the analysis, policy recommendations provided to OECD countries on the impact of health expenditures on tourism receipts for the postCOVID-19 period. The Hausman specification test was applied to select the appropriate model to be used in panel data analysis. A random effects estimator was chosen for the model. The problems of varying variance, autocorrelation, and cross-sectional dependency in the findings obtained with the random effects estimator was solved with Driscoll-Kraay resistant standard errors. The analysis was concerned with whether health expenditures current year and four lags of which were associated with tourism receipts. While the current and three-year lags of health expenditures in OECD countries did not have a significant association with tourism receipts, four-year lag had a positive effect on tourism receipts. Life expectancy and GDP per capita also found to have positively affected tourism receipts. As a result of the findings, it can be concluded that the investments and improvements in the field of health can have an important role on tourism receipts, an important source of income for countries.