AIDS and African Development

Abstract

Because AIDS affects primarily the most productive age group and is fatal and widespread, it will have a larger impact on African development than other more common diseases. Infection rates are higher in urban than in rural areas, and studies suggest that they are highest among urban high-income, skilled men and their partners. Macroeconomic models show that the greater the infection rate among educated workers and the greater the propensity to finance medical care out of savings, the more detrimental is the impact of AIDS on the growth of per capita income. Regardless of the macroeconomic effect, most households and businesses directly affected by AIDS will be economically worse off, at least in the short run. It is not clear, however, what effect AIDS will have on poverty in Sub-Saharan Africa or on income inequality. Governments need to assess the potential economic impact of AIDS, implement cost-effective programs to mitigate the impact, and target prevention programs to the economic sectors most sensitive to HIV infection.

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