The macroeconomic impact of AIDS in sub-Saharan Africa

Abstract

This paper estimates the macroeconomic impact of Acquired Immune Deficiency Syndrome (AIDS) on the sub-Saharan economies by projecting the growth trajectories of 30 countries with and without the AIDS epidemic over the period 1990-2025. The paper defines the impact of the epidemic to be the difference between the trend growth rates with and without AIDS. If the only effect of the AIDS epidemic were to reduce the population growth rate, it would increase the growth rate of per capita income in any plausible economic model. The central question addressed by this paper is whether the specific characteristics of the AIDS epidemic would be sufficient to reverse this prediction, such that per capita income growth would be negative rather than positive. The characteristics examined here are the effect of the epidemic on savings and the distribution of the epidemic by productivity class of worker, which the paper calls the socio-economic gradient of the epidemic. The paper shows that an AIDS epidemic can reduce the growth rate of per capita income in the average country even when it is evenly distributed across productivity classes of workers, provided at least 50 of treatment costs are extracted from savings. Either raising the percentage of treatment costs financed from savings or biasing the epidemic toward the more productive workers increases the negative impact on per capita growth and the two combined effects interact to produce an even larger impact.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 118 citations exist upstream.