This paper investigated the causality and co-integration relationships between economic growth and health care expenditures in developing countries during 1990-2009. This paper concentrated on panel cointegration and causality in VECM framework. The findings revealed that there is a short-run causality from GDP to health care spending, while it is not observed any short-run causality from health spending to economic growth. Likewise, there is a bilateral causality and long-run relationship between economic growth and health spending. In other words, the findings indicated that income is an important factor across developing countries in the level and growth of health care expenditure, in long-run. As well, the health-led growth hypothesis in developing countries is confirmed.
