Assessment of the Impact of Foreign Trade and Digitalization on Health Expenditures in the G7 Countries

Healthy living is widely regarded as an important indicator of a country's level of development, increasing the importance of health systems and investments in healthcare. In this context, understanding the economic, demographic, and technological determinants of health expenditures has become increasingly important. The purpose of this study is to examine the dynamic relationships between health expenditures and economic growth (GDP), trade openness, infant mortality, life expectancy, and internet usage in G7 countries. In terms of methodology, the study employs the Panel Vector Autoregression (Panel VAR) method using annual data from G7 countries covering the period 2000-2024, together with the Panel Granger causality test to investigate the direction of causal relationships among the variables. The findings indicate that economic growth and life expectancy positively affect health expenditures, whereas trade openness, infant mortality, and internet usage have negative effects. The Panel Granger causality results further reveal significant causal relationships from economic growth, infant mortality, life expectancy, internet usage, and trade openness to health expenditures. In particular, a statistically significant unidirectional causal relationship is identified from trade openness to health expenditures, while no significant causality is found in the opposite direction. The main contribution of this study lies in its multidimensional examination of the determinants of health expenditures in G7 countries within a dynamic panel framework. By jointly considering economic, demographic, trade-related, and technological factors, the study provides a more comprehensive understanding of the dynamics shaping health expenditures and offers relevant evidence for the development of sustainable and effective health financing policies.