LAUSR

While previous studies have neglected the spatial interaction effects in modelling healthcare expenditure across countries, this study provides the first thorough spatial analysis of public healthcare expenditures between countries so far. It investigates the determinants of public healthcare expenditure in Sub‐Saharan Africa (SSA) using a balanced panel of 43 SSA countries over the period 2000 to 2015. Both spatial interdependence and individual heterogeneity are accounted for through the application of the spatial autoregressive model so as to avoid potential bias and inefficiencies in parameter estimates. In addition to statistically significant effects of income, population density, official development assistance, and political stability, the results indicate the existence of positive spatial dependence in public healthcare expenditure in SSA. This suggests that governments in SSA countries tend to base their decision to allocate healthcare expenditure on that of nearby countries. Moreover, the results reveal significant impacts of population density and official development assistance of neighbouring countries on a country's level of public healthcare expenditure.