Volltext: Very small countries: economic success against all odds

Hypothesis 2:Given the existence of considerable economies of scale, health system performance and country size should either be positively related or relative health expenditure and country size should be negatively related. We start by testing the first part of Hypothesis 2. The assessment of health system performanceis based on two comprehensive indicators of the WHO. One indicator (henceforth «on level of health») measures how efficiently health systems translate expenditure into health. Health in this context is measured by the so-called disability-adjusted life ex- pectancy. Specifically, by applying a frontier production model, which displays the relationship between achieved levels of health and health ex- penditure, the ratio between maximum attainable and actual goal achie- vement can be computed.91A similar procedure is applied to arrive at the second indicator (henceforth, «overall health system performance»), where the relationship of overall health system achievement to health ex- penditure is assessed. Some of the important determinants of health system achievements are disability-adjusted life expectancy, health equality in terms of child survival, responsiveness level, responsiveness distribution and fairness of financial contribution (WHO, 2000, p. 144f). The results for the two indicators in terms of size dependency are, however, very similar. It is therefore not necessary to go into details of indicator composition here. The overall picture that emerges from the empirical analysis is clear. As expected, a univariate regression with a performance indicator as dependent variable and the logarithm of population as a proxy for country size do not yield any significant results, irrespective of the choice of performance indicator. It is obvious that such a regression suf- fers from an omitting variable bias because of the exclusion of the most important explanatory variable, namely country welfare. We assess country welfare, as in Chapter 3, by per capita GNP, based on figures for 1997 drawn from Baratta (1999). The relevant results, which are dis - played in Table 4.9, are much more interesting. Table 4.9 reveals the expected significant relationship for per capita GDP and health system performance. Note that the coefficients are ne- 110 
Very small countries: organizational choice and international outsourcing 91For details see WHO (2000) and Tandon et al. (2000).


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