Measuring The Effects of Learning’s Intensity and Scale Economies in Health Sector Cost of World Countries

Document Type : مقالات پژوهشی

Authors

• samaneh noraniazad ¹
• farhad khodadad ²
• erfaneh rasekh jahromi ³

¹ Assistant profesor of economic, payame noor university, tehran, Iran

² Professor of Economic, Payame Noor University, Tehran, Iran

³ Faculty Member of Economic, Payame Noor University, Tehran, Iran

https://doi.org/10.22067/erd.2021.18814.0

Abstract

Extended abstract
1- Introduction
Learnig by doing which has a central place in economy, refer to the concept that worker’s ability and skills increase over time due to the repetition of a particular task, and this causes the cost of each level of production to decrease over time. This concept was introduced by Arrow to explain the effects of innovation and technological change, and as a stimulus for endogenous economic growth and development. According to him, learning in productive activities and the accumulation of gross investment is a catalyst for the experience (levitt, et al., 2013). This discussion emerged in Wright’s research, at the time planners were looking for a way to predict the cost of building ships and aircraft. In Wright’s study, the learning process is reported as an asymmetric relation between the average cost of production and congestion production, and this process is achieved when the workforce repeats an activity over time, and by doing it repeatedly, its skill and ability increase. This leads to higher efficiency and the identification of a predictable pattern for cost reduction in each sector (Glock, et al., 2019).
In modern economic analysis, the learning process is classified into individual and organizational learning and a distinction is made between intra- and extra-organizational learning. In the individual learning process, in which individuals acquire the necessary skills and abilities   through   experience, the experience will be a by-product or joint product of the production of goods and services and is achieved by investing in labor, training programs, and research and development (R & D) projects. This process can create external savings by sharing learning and developing knowledge to other sectors while improving workers’ performance and saving on production costs (Jaber, 2016).
 
2- Theoretical Framework
The literature on the process of learning and economies of scale, which has always been considered in psychological, management, economic, and medical research, is based on the principle that people learn, through education and gaining experience and knowledge, how to have a better performance at a lower cost by saving time or increasing production (Nembehard, et al., 2019). Lucas defines this concept to explain the increase in the return on disembodid capital in human resources and believes that learning by doing is as effective as academic education in the formation of human capital (Levitt, et al., 2013). Plaza and Rohlf have argued that learning and knowledge development is a kind of intra-sectoral investment that will reduce production costs and induce economic growth because learning is essential with the increased investment in new machinery to use advanced and innovative technology, which in turn will increase productivity and reduce production costs (Plaza & Rohlf, 2008). Currently, the learning process is measured and evaluated using the learning curve as an efficient tool to show the development of employee’s performance through experience. This curve is widely used in production planning, forecasting, cost estimation, and budgeting of organizations and sub-sectors (Ferioli, et.al., 2009).
3- Methodology
The present study evaluated two static and dynamic aspects of cost advantage in health sectors of world countries. Thus, this study was a descriptive-analytical study that employed panel data regression. It should be noted that to develop an econometric model by default, costs were minimized according to the Cobb-Douglas production function and by replacing the input demand in the cost equation, the cost function fitting the Cobb-Douglas production function was obtained (Bahk& Gort., 1993). Moreover, to estimate the model developed based on the average cost data of the health sector, the number of people who received the minimum health services and the cumulative population of people from the beginning of the period to year t-1 was calculated based on the data from the World Bank database. the sample included 187 world countries. In fact, this study sought to evaluate the effect of economies of scale and learning in the health sector, it needed a well-organized model to distinguish the effects of learning and returns to scale from their effects on the cost of each unit of production. Thus, the Cobb- Douglas exponential production function with three variable inputs was used to extract the dual cost function and integrate its production function with the learning curve.
4- Results & Discussion
 The results indicated that, economies of scale have been achieved in the health sectors of the world counties and it has been completely exhausted. Beacase, in the world countries the production coefficient is insignificant, so the return to scale was constant and close to one. In addition to, the learning process has been realized at a rate of 0.46. This implies that by increasing the number of people receiving the minimum health care, it is possible to reduce costs significantly in the health care sector. Also, With the development of knowledge and increasing experience in nearly 60% of countries, it is still possible to take advantage of economies of learning.
5- Conclusions & Suggestions
Learning and economies of scale rates are two static and dynamic aspects of cost advantage, and they are different in world countries. However, in these countries, both components play an effective role in reducing costs. Nevertheless, the role of economies of scale in reducing costs is almost constant, but the economies of learning played the important role in reducing expenditures in the health sector. So, the effects of economies of scale and learning can play a key role in reducing costs in world countries.
In this study, it is recommended to expand human capital learning through the development of physicians and health services personnel training, providing the staff participation in specialized programs.
It is suggested to implement training programs for treatment managers and to employ committed managers with higher knowledge and expertise, to participate in international conferences, and to prepare programs to improve the skills and abilities of different departments of the medical staff.

Keywords

• Learning-by-doing Curve
• Scale Economies
• Healthcare
• Knowledge Density
• Experience

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