Health capital – a sustainable development factor in production

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Ivane Javakhishvili Tbilisi State University Press
The health capital implies investments in a human being that are necessary for maintaining his health and capacity. Health influences a person’s wellbeing. It represents the goods that can be consumed as well as invested. Health, as the consumable good, implies that it gives pleasure to a person. Health, as an investment advantage means that a person is able to work and make incomes. The health investment advantage is determined with the value of the benefit received as a result of the advantage. For example, the life expectancy growth means additional years of work through which a human being receives incomes and invests in his own capital. Disabilities, illness, mortality are perceived as the loss in terms of the social health, causing significant economic losses. Naturally, investments in the health capital promote increasing the number of population capable of working, as well as reducing illness and death rate which in turn has a positive impact on a human capital. The following factors influence formation of the health capital of population: illness of people, disabilities, mortality rate, life expectancy, healthcare expenses and outpatient referral rate. In the period of 1995-2015, in Georgia GDP increased 6.7 mes, that indicates the country’s economic growth. The human development index has increased by 12.2% in this period and hit 0.780 by the year of 2016; According to the rate, Georgia is ranked 70th among 188 countries. The average life expectancy growth has had a positive impact on the country’s economic growth. The same has been done by reduction of maternal and children’s mortality rate and higher state expenses on healthcare. Infant mortality rate decreased from 22 to 9.6 in 19902017 and under-five mortality rate – from 47 to 11.1. For comparison, under-five mortality rate is 11.3 in Europe. Maternal mortality rate dropped from 41 to 13.1. For comparison, maternal mortality rate in Europe is 16. General government expenditure on health has increased and almost doubled in the latest 3 years; that has a positive impact on the population’s health. But, despite these, Georgia is sll significantly lagging behind the threshold set by the WHO recommendations. According to WHO recommendations, state expenditures on health should represent more than 40% in total healthcare expenditures. State expenditures on health care in Georgia represents 37.2% of the total expenses on healthcare, thus Georgia is below the recommendations of the WHO. Due to all above mentioned, Georgian people have to pay by themselves for healthcare issues (up to 63%) [23, 24]. Outpatient referral rate increased from 1.1 to 3.6 per person as the state expenses increased, that positively reflects on the population’s health condition. But this rate is still less than that of European countries (7.5 per person), which is caused by the circumstance that patients are less motivated to go to a doctor for prevention and decide to receive medical service only when they are in critical condition. All this shows that the primary healthcare system cannot fulfill the role of the so-called ‘gatekeeper’. In general, the primary healthcare system has not developed in Georgia. As the health capital fulfils significant role in terms of the country’s economic growth in a long-run perspective, it is highly advisable to promote the development of the primary healthcare system and taking WHO recommendations concerning state healthcare expenses into account.
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Health Capital; Human Capital; Economic Growth
Economics and Business, №1, 2019, pp. 98-109