The Effect of Industrial Production on Healthcare Expenditures in TurkeyAyhan Aytaç, Umut Akduğan
In a circular economy, finding alternatives for sustainable production, consumption, and work lines that prioritize human health and reduce the use of natural resources can also reduce the pressure of production on environment and health. At this point, it is very important to analyze the human health related consequences of linear production processes and ensure that market prices internalize externalities related to healthcare costs. In this study, the effects of industrial production and economic growth on healthcare expenditures is analyzed for Turkey. In addition, the negative effects of pollution from current linear production models and the use of natural resources on health are examined. The study aims to question and discuss the GDP calculation methods that do not include these negative externalities. The long-term relationship between healthcare expenditures, industrial production, and economic growth in Turkey were examined with a boundstest. The short-term and long-term flexibilities were determined with EKK and DOLS methods. The findings revealed that there is a long-term relationship between healthcare expenditures, industrial production, and the GDP in the period examined. In addition; the estimation results showed that there is no significant relationship between industrial production, the GDP, and healthcare expenditures in the short-term, but changes in industrial production and the GDP in the long-term affected healthcare expenditures positively. Therefore, this study demonstrated that an increase in industrial production along with economic growth caused an increase in healthcare expenditures. In other words, industrialization and production activities in Turkey causes negative externalities related to the environment and hence health.
Türkiye’de Sanayi Üretiminin Sağlık Harcamalarına EtkisiAyhan Aytaç, Umut Akduğan
Döngüsel ekonomide sürdürülebilir üretim ve tüketim ile insan sağlığını önceleyen iş kolları için alternatiflerin bulunması ve doğal kaynak kullanımının azaltılması, üretimin çevre ve sağlık üzerindeki baskısının da azalmasını sağlayacaktır. Bu noktada, doğrusal üretim süreçlerinin insan sağlığı ile ilgili sonuçlarını analiz etmek ve piyasa fiyatlarının sağlık maliyetleri ile ilgili dışsallıkları içselleştirmesini sağlamak oldukça önemlidir. Türkiye için sanayi üretiminin ve ekonomik büyümenin sağlık harcamalarına etkisinin analiz edildiği bu çalışmada temel olarak, mevcut doğrusal üretim modelleri ve doğal kaynak kullanımından kaynaklanan kirliliğin sağlık üzerindeki olumsuz etkileri araştırılmıştır. Bunun yanında, söz konusu negatif dışsallıkları içermeyen GSYH hesaplama yöntemlerini de sorgulamak ve tartışmaya açmak amaçlanmıştır. Bu doğrultuda; Türkiye’de sanayi üretimi ve ekonomik büyüme ile sağlık harcamaları arasındaki uzun dönemli ilişkiler sınır testi ile incelenmiş, kısa dönem ve uzun dönem esneklikleri, EKK ve DOLS yöntemleriyle belirlenmiştir. Bulgular, incelenen dönemde sağlık harcamaları ile sanayi üretimi ve GSYH arasında uzun dönemli ilişki olduğunu ortaya koymaktadır. Buna ilaveten; tahmin sonuçları, sanayi üretimi ve GSYH ile sağlık harcamaları arasında kısa dönemde anlamlı bir ilişki olmadığını, ancak uzun dönemde sanayi üretiminin ve GSYH’daki değişimlerin, sağlık harcamalarını pozitif etkilediğini göstermektedir. Dolayısıyla, ekonomik büyüme ile birlikte sanayi üretimindeki artışın sağlık harcamalarının da artmasına neden olduğu, başka bir ifadeyle, Türkiye’de sanayileşmenin ve üretim faaliyetlerinin çevre ve dolayısıyla sağlıkla ilgili negatif dışsallıklara neden olduğunu ortaya konmaktadır.
In most of the world, the situation related to environmental pollution and climate change is deteriorating, whereas, in households air and water pollution related to poverty and lifestyles is decreasing. Forms of pollution, such as atmospheric pollution, chemical pollution, and soil pollution coming from sectors like industrial production, mining, electricity generation, fossil fuel-based transportation, and carriage and mechanized agriculture, are increasing gradually especially in developing and less developed low and middle-income countries. This situation causes permanent damage to human health and also reduces the total well-being and quality of life in these countries. In this context, analyzing the consequences of production processes related to human health is very important in providing information for market actors in order to ensure that market prices internalize the externalities related to health costs. Discussion of macroeconomic indicators and GDP calculation methods will be instructive in questioning whether the existing indicators include the use of natural resources and the health effects of pollution from production. On the other hand; in the design of new policies, measuring the exact extent of the externalities caused by pollution from production processes is an important requirement to internalize and express them in market prices.
In this study, the impact of industrial production and economic growth on healthcare expenditures was analyzed for Turkey. The negative effects of pollution emanating from current linear production models and the use of natural resources on both human and public health were examined. In addition; GDP calculation methods and other macroeconomic indicators that do not include the negative externalities related to environment and health caused by production activities were also questioned and discussed. The long-term relationship between industrial production, economic growth and healthcare expenditures in Turkey were examined using a bounds test based on the ARDL model and subsequently short-term and long-term flexibilities were calculated with the EKK and DOLS methods using the same models. The findings showed that there is a long-term relationship between healthcare expenditures, industrial production and the GDP. Additionally, estimation results showed that there is no significant relationship between industrial production, the GDP, and healthcare expenditures in the short-term, but changes in industrial production 3 and the GDP in the long-term affected healthcare expenditures positively. In other words, the findings showed that an increase in industrial production along with economic growth in Turkey increases healthcare expenditures. According to the long-term coefficients calculated by estimating the ARDL model with the EKK method; a 1% rise in industrial production increases healthcare expenditures by 0.91%, and a 1% rise in the GDP increases healthcare expenditures by 0.86%. However, according to the long-term coefficients calculated from the DOLS model estimation, a 1% rise in industrial production increases healthcare expenditures by 0.85%, while a 1% rise in the GDP increases healthcare expenditures by 0.74%.
The analysis shows that industrialization and production activities in Turkey causes negative externalities related to environment and health. Considering that circular economy methods have not been adopted yet, analyzing the negative effects of current production models in a linear economy on the environment and health is very important, especially in order to internalize the negative externalities related to costs that cause an increase in healthcare expenditures and to reflect them in market prices. At this point, some macroeconomic indicators and the methods used for calculating the GDP should be reviewed and updated in a way to take into account healthcare costs and the use of natural resources arising from economic activities and environmental pollution caused by these.
On the other hand, a successful transition to a circular economy, especially in developing countries, results in a decrease in regional (as well as global) environmental pollution (including the emissions that cause air, water, and soil pollution) arising from production and consumption processes. In a circular economy, the existence of sustainable production, consumption, and business models that prioritize human health will contribute to a decrease in the use of natural resources and the elimination of the pressure of production on environment and health. This will provide longterm indirect health benefits in correlation to the reduction of global environmental pollution.