New Economics Papers
on Central and South America
Issue of 2005‒06‒05
two papers chosen by

  1. Risk Adjustment and Primary Health Care in Chile By Veronica Vargas; Juergen Wasem
  2. Multinationals and Plant Exit: Evidence from Chile By Roberto Alvarez; Holger Görg

  1. By: Veronica Vargas (Professor of Health Economics, ILADES-Georgetown University-Universidad Alberto Hurtado, Chile.); Juergen Wasem (Department of Economics, University of Essen, Germany)
    Abstract: Chile´s primary health care (PHC) payment system uses income of the municipalities and the geographic location of health centres (HCs) to adjust current capitation payments. Concerns over the ability of the formula to direct health resources where greater health needs are discussed. We uses a sample of 10,000 individuals was drawn and two years data was collected from a region in Chile. Three models were tested: i) age and gender, ii) age, gender and the presence of two key diagnoses and iii) age, gender and the presence of seven key diagnoses, to estimate how significant their effects were on utilization and per-capita expenditures. Regression analysis was performed to calculate the predictive values of the independent variables and two tests applied to select the best and next best model. The main results are the following. First, the use of services by age and gender confirmed international trends, where children under five, women and elderly were the main users of PHC services. Second, women consulted twice as much as men. Thrid, clear difference by SES were observed, indigents aged 65+ under-utilised PHC services. From the three models simulated, the major improvement in the predictive power took place from the demographic to the demographic plus two diagnoses model. Improvements were limited when five other diagnoses were added (R-square=28%). The conclusion is that the current normative formula used by the MOH provides little incentives to care appropriately for indigents and people with chronic conditions such as diabetes and hypertension. A capitation payment that adjusts for age, gender, and presence of hypertension and diabetes will better guide resources to those with poorer health and lower SES.
    Keywords: Primary health care, Payment system, Risk adjustment
    JEL: H51 I11 I18
    Date: 2005–05
  2. By: Roberto Alvarez (University of California, Los Angeles); Holger Görg (University of Nottingham, DIW Berlin and IZA Bonn)
    Abstract: This paper examines the link between multinational enterprises and plant exit in Chile. We investigate three main questions: are affiliates of foreign multinationals more likely to exit than domestic firms? Does the exit probability of multinationals depend on its export orientation?, and Does the presence of multinationals affect the survival of other firms in the economy? Our results show that foreign plants are more likely to exit the economy, controlling for other firm and industry characteristics, only during the late 1990s, a period when the Chilean economy experience a massive slowdown. Our data also suggest that only domestic market oriented multinationals responded to this negative shock by being more "footloose"; this is not true for multinational exporters. We also find that the presence of multinationals has a positive effect on plant survival in the early 1990s. This positive effect, however, is fully captured by productivity, once controlling for TFP in our exit regressions we do not find any further impact of multinational presence on a plant’s probability of exit.
    Keywords: exit, survival, multinationals, foreign direct investment, exporting
    JEL: F2 L6
    Date: 2005–05

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