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Role of health expenditure and ICT in a small island economy: a study of Fiji

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Abstract

The economy of Fiji has witnessed a pervasive role of information and communications technology (ICT) on one hand and an increase in lifestyle diseases on the other. The government however has put in policies to exploit the gains from ICT and increased budget allocation to combat some of the burgeoning health problems in their effort to modernize the economy. In this paper, we explore the short-run and long run effects of health expenditure and ICT on per worker output within the augmented Solow framework (Q J Econ 70:65–94, 1956) and the autoregressive distributed lag bounds procedure (Pesaran et al. in J Appl Econ 16:289–326, 2001) over the period 1979–2010. The results show that health expenditure has a positive and significant effect in the short-run only (0.11 %). ICT has positive and significant effect both in the short-run (0.90 %) and the long-run (0.62 %). Further, the Granger-causality tests reveals a strong bi-directional causality between health expenditure and per worker output, a unidirectional strong causation from capital per worker to ICT development, and a weak causation from ICT to per worker output.

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Notes

  1. The link between globalization and health is controversial. However, it can be said that globalization in one way or the other has led to dramatic shifts in human lifestyles that either supports or otherwise the sound human development that either gives impetus to or calls for greater attention to human health.

  2. Capital stock, \(K_{t}\), is defined as \(K_t =(1-\delta )K_{t-1} +I_t\), where \(\delta \) is the depreciation rate and \(I_{t}\) is the investment in constant FJD. Labor stock is estimated from employment to population ratio. We used \(\delta =0.11\); and initial \(K_{0}\) is set as 1.2 times the 1962 GDP in constant 2010 prices.

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Acknowledgments

The authors sincerely thank the anonymous reviewers for their comments, the journal editor, and the Springer Correction Team.

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  1. School of Economics, University of the South Pacific, Suva, Fiji

    Ronald Ravinesh Kumar

  2. School of Accounting and Finance, University of the South Pacific, Suva, Fiji

    Madhukar Singh

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Kumar, R.R., Singh, M. Role of health expenditure and ICT in a small island economy: a study of Fiji. Qual Quant 48, 2295–2311 (2014). https://doi.org/10.1007/s11135-013-9892-7

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