The major challenge facing policy makers is how to allocate limited resources across the range of preferences that contribute to poverty reduction and economic development; including capital expenditures on health, education, infrastructure and recurrent expenditures. The aim of this study is to establish the relationship between healthcare expenditure, the health status and national productivity in Nigeria. The motivation for this study is the relevance of the subject matter. Most of the studies in this area have treated the impact of government’s expenditure on health in Nigeria, without linking such expenditure appropriately to productivity. This study is situated in applied economics and the relevance of applied research cannot be overestimated. Since the public and private health care sectors are broad, we focused on the public healthcare expenditure from 1999-2012 for objective analysis. We reviewed several literatures and also used secondary data to run regression. We also used questionnaires to elicit responses. Public health care expenditure is considered as the explanatory variable for health status, productivity and poverty reduction. However, the causal relationship is weak in the Nigeria scenario. If people are a country’s principal asset, then their health status defines the course of development, and their health characteristics determine the nature and direction of sustainable human development. Nigeria needs investment in health research and innovation. We recommend a universal healthcare coverage; a system that everyone can access healthcare. More so, in an increase ngly globalized world, it is recognized that high levels of investment in research and innovation are essential, both for economic competitiveness, and to yield innovation in areas such as healthcare and environmental technologies. These make tangible improvements to quality of life. The challenges and prospect of the primary healthcare delivery for rural development need further study.
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