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The role of consumption and the financing of health investment under epidemic shocks
01 Jan 2009-Research Papers in Economics (UNU-MERIT, Maastricht Economic and Social Research and Training Centre on Innovation and Technology)-Iss: 006
TL;DR: In this paper, the authors studied the behavior of consumption and health investment resulting from long-lived shocks undermining health capital accumulation and examined the effects on subsequent life cycle of longlived shocks with either an acceleration of health capital deterioration or a decrease in health investment efficiency.
Abstract: We study the behavior of consumption and health investment resulting from shocks undermining health capital accumulation. We examine the effects on subsequent life cycle of long-lived shocks undermining health with either an acceleration of health capital deterioration, or a decrease in health investment efficiency. We also address the issue of the financing of health investment. We provide new evidence based on nonparametric estimations which show complex non-linear interplay between life expectancy and health expenditure. We then develop a benchmark model where consumption and health capital enter additively in the utility function, featuring independence between the returns from ordinary consumption and health. Then, we depart from this setup by assuming non-additive preferences meaning that ordinary consumption also is crucial for health. We show that a shock undermining health which increases health expenditures and weakens the income base, not only affects savings but also compromises the consumption capacity, the human and physical capital of the economy, and undercuts the process of economic development. We also show that the magnitude of the effects strongly depends on the assumed preferences.
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01 Jan 2010
TL;DR: In this article, the authors argue that innovation may be as relevant in the developing part of the world as elsewhere, and that to exploit technology to their own advantage, developing countries need to develop the necessary capabilities for doing so.
Abstract: Innovation is often seen as carried out by highly educated labor in R&D intensive companies with strong ties to leading centers of excellence in the scientific world. Seen from this angle innovation is a typical “first world” activity. There is, however, another way to look at innovation that goes significantly beyond this high-tech picture. In this broader perspective, innovation—the attempt to try out new or improved products, processes, or ways to do things—is an aspect of most if not all economic activities. In this sense, Section 1 puts forward the idea that innovation may be as relevant in the developing part of the world as elsewhere. Section 2 discusses the existing theoretical and empirical literature on the subject. An important conclusion is that to be able to exploit technology to their own advantage, developing countries need to develop the necessary capabilities for doing so. But what are these capabilities and how can they be measured? Section 3 surveys attempts to identify and measure capabilities at the national level. However, the development of such capabilities, it is argued, depends in important ways on what firms do. Section 4, therefore, focuses on recent attempts to survey innovation activity in firms in developing countries and what can be learnt from that. Section 5 discusses the role of domestic versus foreign sources in fostering innovation in the developing part of the world. The final section summarizes the main lessons.
321 citations
TL;DR: In this article, the authors consider how economic globalization has affected opportunities and challenges for developing countries in following a multinational enterprise (MNE)-assisted development strategy, revisiting an earlier article by the authors.
Abstract: This paper considers how economic globalization has affected opportunities and challenges for developing countries in following a multinational enterprise (MNE)-assisted development strategy, revisiting an earlier article by the authors. The growing share of industrial activity owned and/or controlled by MNEs has not—by and large—led to a proportional increase in sustainable domestic industrial growth. Particular attention is paid to how MNEs have responded proactively to globalization by modifying their strategies, spatial organization and the modalities by which they interact with host economic actors, and how these changes alter our understanding of MNEs and development. What has been learnt over the last decade about embeddedness, institutions, inertia, absorptive capacity, spillovers and linkages, and how they can explain the success of some countries (or regions) in promoting growth, and the failure of others, is examined. The need to link MNE and industrial policies systematically is highlighted. A...
296 citations
Posted Content•
TL;DR: In this paper, a discussion of eco-innovation and methods for measuring it is presented, where the authors argue that research and data collection should not be limited to such environmentally motivated innovations, but should encompass all products, processes, or organizational innovations with environmental benefits.
Abstract: In this paper we offer a discussion of eco-innovation and methods for measuring it. Eco-innovation is a
new concept of great importance to business and policy makers, covering many innovations of
environmental benefit. Past research and measurement activity primarily focused on pollution control and
abatement activities or on the enviromnental goods and services sector. We argue that eco-innovation
research and data collection should not be limited to such environmentally motivated innovations, but
should encompass all products, processes, or organizational innovations with environmental benefits.
Attention should be broadened to include innovation in or oriented towards resource use, energy
efficiency, greenhouse gas reduction, waste minimization, reuse and recycling, new materials (for
example nanotechnology-based) and eco-design. Research should cover the drivers, patterns, and benefits
of eco-innovation for each of these applications, since these factors are likely to differ. For measuring
eco-innovation, no single method or indicator is likely to be sufficient. In general, one should therefore
apply different methods for analyzing eco-innovation - to see the "whole elephant" instead of just a part.
More effort should be devoted towards direct measurement of eco-innovation outputs using documentary
and digital sources to complement the current emphasis on innovation inputs such as R&D or patents.
Innovation can also be measured indirectly from changes in resource efficiency and productivity. These
two avenues are underexplored and should be given more attention in order to augment our rather narrow
knowledge basis.
255 citations
01 Jan 2009
TL;DR: In this paper, the authors take a critical look at how to assess the effectiveness of R&D tax incentives and show that the net welfare gain is sensitive to a certain number of parameters.
Abstract: We take a critical look at how to assess the effectiveness of R&D tax incentives. The net welfare gain is shown to be sensitive to a certain number of parameters. In particular, the deadweight loss associated with level-based tax incentives depends on the ex-ante R&D level. We report on the success of a past policy changes and simulate the effect of various parameter changes in the existing Dutch R&D tax incentive scheme. We show that this policy is more effective for small firms than for large firms. We end with a discussion of the pros and cons of volume-based versus incremental R&D tax incentives.
131 citations
TL;DR: In this article, the authors explored the use of complex adaptive systems theory in development policy analysis using a case study drawn from recent events in Uganda, where the changes that took place in the farming system in Soroti district during an outbreak of African cassava mosaic virus disease (ACMVD) and the subsequent decline in cassava production - the main staple food in the area.
Abstract: This paper explores the use of complex adaptive systems theory in development policy analysis using a case study drawn from recent events in Uganda. It documents the changes that took place in the farming system in Soroti district during an outbreak of African cassava mosaic virus disease (ACMVD) and the subsequent decline in cassava production - the main staple food in the area. Resultant adaptation impacts are analysed across cropping, biological, economic and social systems each of which operate as an interlinked sub-system. The policy implications of this story suggest a policy agenda that recognises adaptation capacity as the life blood of complex adaptive systems. Since these types of systems are found in all realms of human activity, it follows that strengthening this capacity is a key developmental priority that requires linking together new configurations of actors and resources to tackle an ever-changing set of contexts.
128 citations
Cites background from "The role of consumption and the fin..."
...…a case study of Chilean salmon farming industry 2009-05 Consumer behaviour: evolution of preferences and the search for novelty by M. Abraham Garcia-Torres 2009-06 The role of consumption and the financing of health investment under epidemic shocks by Théophile T. Azomahou, Bity Diene and…...
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...…the Netherlands by Isabel Maria Bodas Freitas and Bart Verspagen 2009-12 Habit Formation, Demand and Growth through product innovation by M. Abraham Garcia-Torres 2009-13 The Diffusion of Informal Knowledge and Innovation Performance: A sectoral approach by M. Abraham Garcia-Torres and Hugo…...
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References
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Book•
01 Jan 2001
TL;DR: This is the essential companion to Jeffrey Wooldridge's widely-used graduate text Econometric Analysis of Cross Section and Panel Data (MIT Press, 2001).
Abstract: The second edition of this acclaimed graduate text provides a unified treatment of two methods used in contemporary econometric research, cross section and data panel methods. By focusing on assumptions that can be given behavioral content, the book maintains an appropriate level of rigor while emphasizing intuitive thinking. The analysis covers both linear and nonlinear models, including models with dynamics and/or individual heterogeneity. In addition to general estimation frameworks (particular methods of moments and maximum likelihood), specific linear and nonlinear methods are covered in detail, including probit and logit models and their multivariate, Tobit models, models for count data, censored and missing data schemes, causal (or treatment) effects, and duration analysis. Econometric Analysis of Cross Section and Panel Data was the first graduate econometrics text to focus on microeconomic data structures, allowing assumptions to be separated into population and sampling assumptions. This second edition has been substantially updated and revised. Improvements include a broader class of models for missing data problems; more detailed treatment of cluster problems, an important topic for empirical researchers; expanded discussion of "generalized instrumental variables" (GIV) estimation; new coverage (based on the author's own recent research) of inverse probability weighting; a more complete framework for estimating treatment effects with panel data, and a firmly established link between econometric approaches to nonlinear panel data and the "generalized estimating equation" literature popular in statistics and other fields. New attention is given to explaining when particular econometric methods can be applied; the goal is not only to tell readers what does work, but why certain "obvious" procedures do not. The numerous included exercises, both theoretical and computer-based, allow the reader to extend methods covered in the text and discover new insights.
28,298 citations
22 Apr 2014
TL;DR: The generalized additive model (GA) as discussed by the authors is a generalization of the generalized linear model, which replaces the linear model with a sum of smooth functions in an iterative procedure called local scoring algorithm.
Abstract: Likelihood-based regression models such as the normal linear regression model and the linear logistic model, assume a linear (or some other parametric) form for the covariates $X_1, X_2, \cdots, X_p$. We introduce the class of generalized additive models which replaces the linear form $\sum \beta_jX_j$ by a sum of smooth functions $\sum s_j(X_j)$. The $s_j(\cdot)$'s are unspecified functions that are estimated using a scatterplot smoother, in an iterative procedure we call the local scoring algorithm. The technique is applicable to any likelihood-based regression model: the class of generalized linear models contains many of these. In this class the linear predictor $\eta = \Sigma \beta_jX_j$ is replaced by the additive predictor $\Sigma s_j(X_j)$; hence, the name generalized additive models. We illustrate the technique with binary response and survival data. In both cases, the method proves to be useful in uncovering nonlinear covariate effects. It has the advantage of being completely automatic, i.e., no "detective work" is needed on the part of the statistician. As a theoretical underpinning, the technique is viewed as an empirical method of maximizing the expected log likelihood, or equivalently, of minimizing the Kullback-Leibler distance to the true model.
5,700 citations
TL;DR: A model of the demand for the commodity "good health" is constructed and it is shown that the shadow price rises with age if the rate of depreciation on the stock of health rises over the life cycle and falls with education if more educated people are more efficient producers of health.
Abstract: The aim of this study is to construct a model of the demand for the commodity "good health." The central proposition of the model is that health can be viewed as a durable capital stock that produces an output of healthy time. It is assumed that individuals inherit an initial stock of health that depreciates with age and can be increased by investment. In this framework, the "shadow price" of health depends on many other variables besides the price of medical care. It is shown that the shadow price rises with age if the rate of depreciation on the stock of health rises over the life cycle and falls with education if more educated people are more efficient producers of health. Of particular importance is the conclusion that, under certain conditions, an increase in the shadow price may simultaneously reduce the quantity of health demanded and increase the quantity of medical care demanded.
4,532 citations
TL;DR: It is speculated about the mechanisms that could cause malaria to have such a large impact on the economy, such as foreign investment and economic networks within the country, and a second independent measure of malaria has a slightly higher correlation with economic growth in the 1980-1996 period.
Abstract: Malaria and poverty are intimately connected. Controlling for factors such as tropical location, colonial history, and geographical isolation, countries with intensive malaria had income levels in 1995 of only 33% that of countries without malaria, whether or not the countries were in Africa. The high levels of malaria in poor countries are not mainly a consequence of poverty. Malaria is geographically specific. The ecological conditions that support the more efficient malaria mosquito vectors primarily determine the distribution and intensity of the disease. Intensive efforts to eliminate malaria in the most severely affected tropical countries have been largely ineffective. Countries that have eliminated malaria in the past half century have all been either subtropical or islands. These countries' economic growth in the 5 years after eliminating malaria has usually been substantially higher than growth in the neighboring countries. Cross-country regressions for the 1965-1990 period confirm the relationship between malaria and economic growth. Taking into account initial poverty, economic policy, tropical location, and life expectancy, among other factors, countries with intensive malaria grew 1.3% less per person per year, and a 10% reduction in malaria was associated with 0.3% higher growth. Controlling for many other tropical diseases does not change the correlation of malaria with economic growth, and these diseases are not themselves significantly negatively correlated with economic growth. A second independent measure of malaria has a slightly higher correlation with economic growth in the 1980-1996 period. We speculate about the mechanisms that could cause malaria to have such a large impact on the economy, such as foreign investment and economic networks within the country.
1,576 citations
"The role of consumption and the fin..." refers background in this paper
...Gallup and Sachs (2001) argued that wiping out malaria in sub-Saharan Africa could increase the continent’s per capita growth rate by as much as 2.6% by year....
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