Purpose - The main aim of this paper is to empirically test a model that
has central government health expenditure and advancement in medical
technology as two separate determinants of economic growth rates in the
Pacific island countries (PICs). Design/methodology/approach - The data
used in this research have been collected from WHO and ADB database for
the periods between 2000 and 2012. The model used to test the main
research question is based on the variant Cobb-Douglas production
function with constant returns to scale. Findings - This research found
that health expenditure has a significant impact on the economic growth
rate of the PICs. This study also found that the contemporary level of
usage of advanced medical technology in the PICs is relatively low as
compared to the total population of the country. If the PICs need to
achieve high levels of economic growth rates, governments of the PICs
need to improve its expenditure in the health sector. Good and qualified
doctors need to be hired and the medical education has to be made more
competitive. Improvement in the health services in the PICs will reduce
mortality, improve per capita health and improve the national economic
welfare of Oceania region. Research limitations/implications - Data
availability was the major limitation in this research. Data were
available for only seven PICs. Practical implications - This research
has implications for the academics, practitioners, and policy makers.
Social implications - The research findings from this research have
implications for the society as it shows that health expenditure is
positively related to economic growth rates. Originality/value - In the
context of the PICs, no studies have been conducted that have analysed
the relationship between health expenditure, medical technology
advancement and the economic growth rate of the PICs. This research
seeks to build and extend the existing state of research on augmented
Cobb-Douglas production function and health economics in the PICs.