Health is one of the basic capabilities that generate economic freedom. Better health status is described as an indicator of economic success and failure of the nations. The availability of health care services and the physical, biological, epidemiological and socio economic environment in which a person live, broadly determines disease pattern, health status and therefore the quality of life. Despite of economic improvement, social and demographic indicators in Pakistan presents a dismal picture. Pakistan still has one of the highest infant mortality rates and low (female) life expectancy compared with the other developing countries of comparable income level. Keeping in view the likely role that health can play, this dissertation aims at empirically estimating the health related variables and their impact on economic development of Pakistan. This dissertation aims at empirically estimating the role of different macroeconomic and policy relevant factors affecting public health spending and health status in Pakistan over time. An attempt has been made to see the likely impact of health related variables like health status and per capita calorie availability on economic development using mainly health demand function and health production function. Time series data of Pakistan from 1972 to 2008 is used employing Johansen cointegration methodology, long run income elasticity of health expenditures in Pakistan is estimated. Contrary to the estimates for most of the industrialized countries, income elasticity of public health expenditures in Pakistan is less than unity while the short run elasticity is even negative.