The Interactive Effect of Good Governance and Oil Rent on Life Expectancy in Iran

Oil revenues, as an important part of the government's revenues in Iran's oil-dependent economy, play an important role in providing public sector expenditures, including the health sector and consequently have an impact on health outputs. On the other hand, the way of using and managing oil revenues is an important factor in the way of this effect. Therefore, the main purpose of this study was to investigate the interactive effect of good governance and oil rent on life expectancy in Iran.

The present descriptive-analytical study investigated the short-term and long-term equilibrium relationship between health output index, per capita income, oil rent, good governance index, and the cross (interactive) effect of good governance and oil rent from 1985 to 2020 using the time series data of Iran. The data used were collected from World Bank global development indicators database and international country risk guide. Also, model estimation was conducted using and autoregressive distributed lag and data analysis was performed using Eviews 10 software.

The results show that in the short and long term, the increase in oil rent improves the health output index in the country. One percent increase in the share of oil rent from gross domestic product (GDP), in the long and short term, increases the life expectancy in the country by about 0.101 and 0.668 percent, respectively. However, the interactive effect of oil rent and good governance index in the short and long term is negative and significant with coefficients of - 0.084 and - 0.515; which shows that oil rent leads to a decrease in life expectancy by weakening good governance indicators.

Based on the findings of this study, it can be said that oil rent is inherently useful in promoting health in the country; but its improper use and management causes the health sector to not benefit from it and even become a loss.