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Waste Not, Want Not

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  • Francesco Grigoli
  • Javier Kapsoli

Abstract

Public health spending is low in emerging and developing economies relative to advanced economies and health outputs and outcomes need to be substantially improved. Simply increasing public expenditure in the health sector, however, may not significantly affect health outcomes if the efficiency of this spending is low. This paper quantifies the inefficiency of public health expenditure and the associated potential gains for emerging and developing economies using a stochastic frontier model that controls for the socioeconomic determinants of health, and provides country-specific estimates. The results suggest that African economies have the lowest efficiency. At current spending levels, they could boost life expectancy up to about five years if they followed best practices.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 13/187.

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Length: 26
Date of creation: 28 Aug 2013
Date of revision:
Handle: RePEc:imf:imfwpa:13/187

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Keywords: Government expenditures; Health care; Emerging markets; Developing countries; Economic models; public health; health spending; public expenditure; public health spending; public spending; infant mortality; health expenditure per capita; health systems; clean water; determinants of health; health economics; health care systems; health sector; access to health care; national health; health care services; health clinics; private spending; health system performance; capita health expenditure; public provision; provision of services; health indicators; provision of health care;

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  1. Francesco Grigoli Author-Email: fgrigoli@imf.org Author-Name: Eduardo Ley Author-Email: eley@worldbank.org, 2012. "Quality of Government and Living Standards," World Bank - Economic Premise, The World Bank, The World Bank, issue 89, pages 1-6, September.
  2. Greene, William H., 1980. "Maximum likelihood estimation of econometric frontier functions," Journal of Econometrics, Elsevier, Elsevier, vol. 13(1), pages 27-56, May.
  3. Herrera, Santiago & Pang, Gaobo, 2005. "Efficiency of public spending in developing countries : an efficiency frontier approach," Policy Research Working Paper Series 3645, The World Bank.
  4. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, Elsevier, vol. 6(1), pages 21-37, July.
  5. Bruce Hollingsworth & John Wildman, 2003. "The efficiency of health production: re-estimating the WHO panel data using parametric and non-parametric approaches to provide additional information," Health Economics, John Wiley & Sons, Ltd., vol. 12(6), pages 493-504.
  6. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-44, June.
  7. Gupta, Sanjeev & Verhoeven, Marijn, 2001. "The efficiency of government expenditure: experiences from Africa," Journal of Policy Modeling, Elsevier, Elsevier, vol. 23(4), pages 433-467, May.
  8. Koetter, Michael & Karmann, Alexander & Fiorentino, Elisabetta, 2006. "The cost efficiency of German banks: a comparison of SFA and DEA," Discussion Paper Series 2: Banking and Financial Studies 2006,10, Deutsche Bundesbank, Research Centre.
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