Does central government health expenditure and medical technology advancement determine economic growth rates in the Pacific island countries?

Abstract

Purpose – The main aim of this paper is to empirically test a model that has central government health expenditure and advancement in medical technology as two separate determinants of economic growth rates in the Pacific island countries (PICs). Design/methodology/approach – The data used in this research have been collected from WHO and ADB database for the periods between 2000 and 2012. The model used to test the main research question is based on the variant Cobb-Douglas production function with constant returns to scale. Findings – This research found that health expenditure has a significant impact on the economic growth rate of the PICs. This study also found that the contemporary level of usage of advanced medical technology in the PICs is relatively low as compared to the total population of the country. If the PICs need to achieve high levels of economic growth rates, governments of the PICs need to improve its expenditure in the health sector. Good and qualified doctors need to be hired and the medical education has to be made more competitive. Improvement in the health services in the PICs will reduce mortality, improve per capita health and improve the national economic welfare of Oceania region. Research limitations/implications – Data availability was the major limitation in this research. Data were available for only seven PICs. Practical implications – This research has implications for the academics, practitioners, and policy makers. Social implications – The research findings from this research have implications for the society as it shows that health expenditure is positively related to economic growth rates. Originality/value – In the context of the PICs, no studies have been conducted that have analysed the relationship between health expenditure, medical technology advancement and the economic growth rate of the PICs. This research seeks to build and extend the existing state of research on augmented Cobb-Douglas production function and health economics in the PICs.