Health Is Wealth: Health Care Spending As An Emerging Market Growth Engine
By Amit Bhartia and Alvaro Pascual
White Papers
February 26, 2013
Executive Summary
We have little doubt that domestic consumption will drive the next leg of emerging markets growth. What we do question, however, are the consensus measures used to gauge which particular markets will actually succeed on this front. The traditional measures, including demographics, income levels, and macro vulnerability, are of course useful, but we think that one important factor is being overlooked: public health care spending. Our argument is based on a simple trickle-up effect: we believe a population with fewer health care concerns would equate to a population with healthier pocketbooks and, ultimately, to healthier domestic markets.
Below, we present various data showing the high correlation between public health care spending and domestic consumption. Selecting countries with high domestic potential is essential given that consumption growth is related to stock returns. We conclude that one of the most effective – and efficient – ways of boosting domestic consumption in emerging markets is through “efficient” government spending on health care.
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