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  5. Making Bricks from Straw: Resources and Productivity in Health Care

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Making Bricks from Straw: Resources and Productivity in Health Care

  • Edward N. Okeke
American Economic Review (Forthcoming)

Abstract

Why do health facilities in developing countries do so poorly? This paper examines the role of financial constraints. I describe an experiment in which we surprised health workers in randomly selected public health clinics in Nigeria with a N600,000 grant paid out in installments over one year. Its administration was left entirely to health workers. I show that the award led to large productivity gains. Using expenditure data combined with novel textual data I provide an explanation for these effects. I show that the award increased investments in physical and human capital, led to lower prices for patients and inspired health workers to do better.

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