Determining the Optimal Allocations of Government’s Healthcare Expenditure Budgets

Author(s): Shane Lowe

Created 06 Nov, 2015
Tags Government healthcare expenditure Labour productivity Non-linear programming
Categories Working Papers
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Traditionally, successive governments in Barbados have heavily subsidized the public provision of healthcare services, but now depressed tax revenues and rising debt burdens have diminished the current administration’s ability to fully fund these programmes. Policymakers must now determine how best to allocate scarce resources to effectively fund these initiatives, while not compromising the quality of public services. However, while substantial research has been conducted on the social and economic benefits of public spending on healthcare in small, developing states in the Caribbean, academics have placed less focus on the effects which individual components of expenditure have on long-term labour productivity and economic growth. This study seeks to fill that gap in the literature by evaluating the impacts of individual public spending on Primary healthcare, Hospital services and the Pharmaceutical programme on labour productivity and determines the most effective allocations of government healthcare budgets. The results suggest that only government’s spending on Primary healthcare positively influences labour productivity, and a reallocation of finances from the Hospital services to fund the Primary healthcare system while simultaneously cutting total spending can yield long-term benefits to both productivity and overall economic growth.

Determining the Optimal Allocations of Government’s Healthcare Expenditure Budgets-Shane Lowe.pdf (907.6 KB)
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