Economic impact of AIDS
Encyclopedia
HIV
Human immunodeficiency virus is a lentivirus that causes acquired immunodeficiency syndrome , a condition in humans in which progressive failure of the immune system allows life-threatening opportunistic infections and cancers to thrive...
and AIDS
AIDS
Acquired immune deficiency syndrome or acquired immunodeficiency syndrome is a disease of the human immune system caused by the human immunodeficiency virus...
affects economic growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
by reducing the availability of human capital
Human capital
Human capitalis the stock of competencies, knowledge and personality attributes embodied in the ability to perform labor so as to produce economic value. It is the attributes gained by a worker through education and experience...
. Without proper nutrition
Nutrition
Nutrition is the provision, to cells and organisms, of the materials necessary to support life. Many common health problems can be prevented or alleviated with a healthy diet....
, health care and medicine that is available in developed countries, large numbers of people are falling victim to AIDS.
They will not only be unable to work, but will also require significant medical care. The forecast is that this will probably cause a collapse of economies and societies in countries with a significant AIDS population. In some heavily infected areas, the epidemic has left behind many orphan
Orphan
An orphan is a child permanently bereaved of or abandoned by his or her parents. In common usage, only a child who has lost both parents is called an orphan...
s cared for by elderly grandparent
Grandparent
Grandparents are the parents of a person's own parent, whether that be a father or a mother. Every sexually-reproducing creature who is not a genetic chimera has a maximum of four genetic grandparents, eight genetic great-grandparents, sixteen genetic great-great-grandparents, etc...
s.
The increased mortality in this region will result in a smaller skilled population
Population decline
Population decline can refer to the decline in population of any organism, but this article refers to population decline in humans. It is a term usually used to describe any great reduction in a human population...
and labor force
Labor force
In economics, a labor force or labour force is a region's combined civilian workforce, including both the employed and unemployed.Normally, the labor force of a country consists of everyone of working age In economics, a labor force or labour force is a region's combined civilian workforce,...
. This smaller labor force
Labor force
In economics, a labor force or labour force is a region's combined civilian workforce, including both the employed and unemployed.Normally, the labor force of a country consists of everyone of working age In economics, a labor force or labour force is a region's combined civilian workforce,...
will be predominantly young people, with reduced knowledge and work experience
Work experience
Work experience is the experience that a person has been working, or worked in a specific field or occupation.- Volunteer work and internships :...
leading to reduced productivity. An increase in workers’ time off to look after sick family members or for sick leave
Sick leave
Sick leave is time off from work that workers can use during periods of temporary illness to stay home and address their health and safety needs without losing pay. Some workplaces offer paid sick time as a matter of workplace policy, and in few jurisdictions it is codified into law...
will also lower productivity. Increased mortality will also weaken the mechanisms that generate human capital and investment
Investment
Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...
in people, through loss of income
Income
Income is the consumption and savings opportunity gained by an entity within a specified time frame, which is generally expressed in monetary terms. However, for households and individuals, "income is the sum of all the wages, salaries, profits, interests payments, rents and other forms of earnings...
and the death of parents.
By killing off mainly young adults, AIDS seriously weakens the tax
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
able population, reducing the resources available for public expenditures such as education and health services not related to AIDS resulting in increasing pressure for the state's finances and slower growth of the economy. This results in a slower growth of the tax base, an effect that will be reinforced if there are growing expenditures on treating the sick, training (to replace sick workers), sick pay and caring for AIDS orphans. This is especially true if the sharp increase in adult mortality shifts the responsibility and blame from the family to the government in caring for these orphans.
On the level of the household, AIDS results in both the loss of income and increased spending on healthcare by the household. The income effects of this lead to spending reduction as well as a substitution effect away from education and towards healthcare and funeral spending. A study in Côte d'Ivoire
Côte d'Ivoire
The Republic of Côte d'Ivoire or Ivory Coast is a country in West Africa. It has an area of , and borders the countries Liberia, Guinea, Mali, Burkina Faso and Ghana; its southern boundary is along the Gulf of Guinea. The country's population was 15,366,672 in 1998 and was estimated to be...
showed that households with an HIV/AIDS patient spent twice as much on medical expenses as other households.
With economic stimulus from the government, however, HIV/AIDS can be fought through the economy. With some money, HIV/AIDS patients will have to worry less about getting enough food and shelter and more about fighting their disease. However, if economic conditions aren't good, a person with HIV/AIDS may decide to become a sex trade worker to earn more money. As a result, more people become infected with HIV/AIDS.
UNAIDS, WHO and the United Nations Development Programme
United Nations Development Programme
The United Nations Development Programme is the United Nations' global development network. It advocates for change and connects countries to knowledge, experience and resources to help people build a better life. UNDP operates in 177 countries, working with nations on their own solutions to...
have documented a correlation between the decreasing life expectancies and the lowering of gross national product in many African countries with prevalence rates of 10% or more. Indeed, since 1992 predictions that AIDS would slow economic growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
in these countries have been published. The degree of impact depended on assumptions about the extent to which illness would be funded by savings and who would be infected.
Conclusions reached from models of the growth trajectories of 30 sub-Saharan economies over the period 1990–2025 were that the economic growth rates of these countries would be between 0.56 and 1.47% lower. The impact on gross domestic product
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
(GDP) per capita was less conclusive. However, in 2000, the rate of growth of Africa's per capita GDP was in fact reduced by 0.7% per year from 1990–1997 with a further 0.3% per year lower in countries also affected by malaria
Malaria
Malaria is a mosquito-borne infectious disease of humans and other animals caused by eukaryotic protists of the genus Plasmodium. The disease results from the multiplication of Plasmodium parasites within red blood cells, causing symptoms that typically include fever and headache, in severe cases...
. The forecast now is that the growth of GDP for these countries will undergo a further reduction of between 0.5 and 2.6% per annum. However, these estimates may be an underestimate, as they do not look at the effects on output per capita
Per capita
Per capita is a Latin prepositional phrase: per and capita . The phrase thus means "by heads" or "for each head", i.e. per individual or per person...
.
Many governments in sub-Saharan Africa denied that there was a problem for years, and are only now starting to work towards solutions. Underfunding is a problem in all areas of HIV prevention when compared to even conservative estimates of the problems.
Recent research by the Overseas Development Institute
Overseas Development Institute
The Overseas Development Institute is one of the leading independent think tanks on international development and humanitarian issues. Based in London, its mission is "to inspire and inform policy and practice which lead to the reduction of poverty, the alleviation of suffering and the achievement...
(ODI) has suggested that the private sector has begun to recognize the impact of HIV/AIDS on the bottom line, both directly and indirectly. It is estimated that a company can generate an average return of US$3 for every US$1 invested in employee health due to a reduced absenteeism, better productivity and reduction in employee turnover.
Indirectly there are also important implications on the supply chain
Supply chain
A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to...
. Many multi-national corporations (MNCs) have therefore gotten involved in HIV/AIDS initiatives of three main types: a community-based partnerships, supply chain support, and sector-based initiatives.
The launching of the world's first official HIV/AIDS Toolkit in Zimbabwe
Zimbabwe
Zimbabwe is a landlocked country located in the southern part of the African continent, between the Zambezi and Limpopo rivers. It is bordered by South Africa to the south, Botswana to the southwest, Zambia and a tip of Namibia to the northwest and Mozambique to the east. Zimbabwe has three...
on October 3, 2006 is a product of collaborative work between the International Federation of Red Cross and Red Crescent Societies
International Red Cross and Red Crescent Movement
The International Red Cross and Red Crescent Movement is an international humanitarian movement with approximately 97 million volunteers, members and staff worldwide which was founded to protect human life and health, to ensure respect for all human beings, and to prevent and alleviate human...
, World Health Organization
World Health Organization
The World Health Organization is a specialized agency of the United Nations that acts as a coordinating authority on international public health. Established on 7 April 1948, with headquarters in Geneva, Switzerland, the agency inherited the mandate and resources of its predecessor, the Health...
and the Southern Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
HIV/AIDS Information Dissemination Service. It is for the strengthening of people living with HIV/AIDS and nurses by minimal external support. The package, which is in form of eight modules focusing on basic facts about HIV and AIDS, was pre-tested in Zimbabwe in March 2006 to determine its adaptability. It disposes, among other things, categorized guidelines on clinical management, education and counseling of AIDS victims at community level.
The Copenhagen Consensus
Copenhagen Consensus
Copenhagen Consensus is a project that seeks to establish priorities for advancing global welfare using methodologies based on the theory of welfare economics. It was conceived and organized by Bjørn Lomborg, the author of The Skeptical Environmentalist and the then director of the Danish...
is a project that seeks to establish priorities for advancing global welfare using methodologies based on the theory of welfare economics
Welfare economics
Welfare economics is a branch of economics that uses microeconomic techniques to evaluate economic well-being, especially relative to competitive general equilibrium within an economy as to economic efficiency and the resulting income distribution associated with it...
. The participants are all economists, with the focus of the project being a rational prioritization based on economic analysis. The project is based on the contention that, in spite of the billions of dollars spent on global challenges by the United Nations, the governments of wealthy nations, foundations, charities, and non-governmental organizations, the money spent on problems such as malnutrition and climate change is not sufficient to meet many internationally-agreed targets. The highest priority was assigned to implementing new measures to prevent the spread of HIV and AIDS. The economists estimated that an investment of $27 billion could avert nearly 30 million new infections by 2010.