HIV/AIDS as a Fiscal Liability

The costs of HIV/AIDS programs are significant from a macroeconomic or fiscal perspective in a number of countries. Assessing the fiscal implications is complicated by the long lags between infection and the need for HIV/AIDS-related services, and the long duration over which these services (notably treatment) are required. The paper interprets the fiscal costs of HIV/AIDS programs as quasi-liabilities, which are incurred by HIV infections and are paid off as HIV/AIDS-related services are delivered. On the microeconomic level, the analysis yields estimates of the costs incurred by single HIV infections, which - together with other criteria - can be used in assessing the effectiveness of HIV/AIDS program allocations. On the macroeconomic level, the analysis highlights the large magnitude of the HIV/AIDS quasi-liability (according to criteria for the sustainability of public debt), and quantifies the fiscal savings achieved or projected as a consequence of declining HIV incidence. --HIV/AIDS,health shocks,health expenditures,social expenditures,fiscal space,debt sustainability,quasi-liabilities,Africa,Botswana,South Africa,Swaziland,Uganda

HIV/AIDS as a Fiscal Liability

The costs of HIV/AIDS programs are significant from a macroeconomic or fiscal perspective in a number of countries. Assessing the fiscal implications is complicated by the long lags between infection and the need for HIV/AIDS-related services, and the long duration over which these services (notably treatment) are required. The paper interprets the fiscal costs of HIV/AIDS programs as quasi-liabilities, which are incurred by HIV infections and are paid off as HIV/AIDS-related services are delivered. On the microeconomic level, the analysis yields estimates of the costs incurred by single HIV infections, which - together with other criteria - can be used in assessing the effectiveness of HIV/AIDS program allocations. On the macroeconomic level, the analysis highlights the large magnitude of the HIV/AIDS quasi-liability (according to criteria for the sustainability of public debt), and quantifies the fiscal savings achieved or projected as a consequence of declining HIV incidence

Economic growth in development---health, demographics, and access to technologies.

The first substantive chapter (II) addresses the macroeconomic impact of HIV/AIDS, with reference to sub-Saharan Africa. The framework is designed to capture some interactions between the formal and the informal sector, and - reflecting open capital markets of many economies affected by HIV/AIDS - to address the implications of capital mobility. Additionally, our study is the first academic study of the growth impact of scaling up antiretroviral treatment. Allowing for capital mobility, our analysis returns a stronger impact of HIV/AIDS on output and income per capita than the corresponding closed-economy models. The estimated impact on the informal sector is more pronounced than for the formal sector, reflecting a stronger impact of HIV/AIDS on savings rates. GDP per capita is lower in the scenario with comprehensive scaling-up of antiretroviral treatment, as rising costs of care and treatment affect savings rates. Chapter III adapts a microeconomic framework with forward-looking agents to study the contributions of health, as well as income, to living standards, drawing on empirical work on the value of statistical life. For leading industrialized countries, the contribution of health over long periods of time has been of similar magnitude as rising incomes, but the contribution of health has slowed down since about 1950. For developing countries, the slowdown occurred somewhat later. HIV/AIDS has resulted in steep declines in living standards in a number of countries in sub-Saharan Africa. Chapter IV focuses on the impact of capital-deepening arising from falling relative prices of ICT equipment. The estimated impact of ICT-related capital deepening on growth in developing countries is substantial (about 0.3 percentage points), although lower than comparable estimates for leading industrialized countries. Unlike in some industrialized countries, the impact of ICT-related capital deepening has not slowed down after 2000, owing to growing absorption of communications equipment

Financing essential HIV services: a new economic agenda.

Anna Vassall and colleagues discuss the need for, and challenges facing, innovative and sustainable financing of the HIV response. Please see later in the article for the Editors' Summary

HIV/AIDS, demography and development: individual choices versus public policies in SSA

Despite the increasing rate of diffusion of effective therapies, the battle against HIV/AIDS in Sub-Saharan Africa (SSA) is far from being over. Three main challenges are that the epidemics might paralyse or reverse the fertility transition, the expansion of the resources needed to finance the fight against HIV, and the emerging resistance to anti-retroviral treatments. This research proposes a UGT-like model showing the complexity of the interplay amongst the (macro)economy, the epidemics, their endogenous feedback on mortality and fertility and the central role of policy actions aimed to fight HIV. The disease-induced increase in adult mortality can hamper economic development by its upward pressure on the precautionary demand for children and downward pressure on education. This can dramatically reduce physical and human capital accumulation

Financing HIV/AIDS programs in sub-Saharan Africa.

This paper offers an analysis of the costs and the financing of HIV/AIDS programs for countries in sub-Saharan Africa. The rate of external financing varies with gross domestic product (GDP) per capita, but not much at all with HIV prevalence. In six of the thirty-four countries examined, the costs of HIV/AIDS programs will exceed 3 percent of GDP by 2015. Most of these are low-income countries. Considerable external support at current rates in these countries would help contain the fiscal costs to around 1 percent of GDP. But if that support dwindles, countries would have to borrow money or cut back on their own spending for HIV/AIDS

The Economic Consequences of HIV/AIDS in Southern Africa

The paper provides an analysis of the impact of HIV/AIDS on the health sector, public education, the supply of labor and the returns to training in nine Southern African countries. Drawing on the preceding sections, it assesses the impact of HIV/AIDS on per capita income in a neoclassical growth framework. HIV/AIDS affects per capita income mainly through its impact of human capital, as measured by the supply of experienced workers. Other factors include the impact on capital accumulation, on education, and on total factor productivity.

Providing Health Care to HIV Patients in Southern Africa

The paper provides an economic analysis of the impact of HIV/AIDS on the health sector i Southern Africa. It provides indicators for the scale of the impact, including estimates of tr. costs of various forms treatment. In anticipation of increasing numbers of patients with HIV/AIDS-related diseases, it is essential to expand the already strained health facilities ar to substantially increase the training of health personnel. While proposed reductions in the prices of antiretroviral therapies will considerably expand the range of those who can affor them, they will remain accessible to a minority of the population only.Government expenditures;Southern Africa;Health care;hiv, hiv/aids, health services, public health, aids, antiretroviral therapies, hospital beds, opportunistic infections, costs of treatment, hiv positive, mortality rates, health service, hiv/aids care, hiv infection, family health, mother

ICT Equipment Investment and Growth in Low- and Lower-Middle-Income Countries

While production of ICT equipment plays a subordinate role for economic growth in most of these countries, they do benefit from capital deepening arising from falling prices of ICT equipment. Adapting established growth accounting approaches to the data environment of low-income countries, we quantify the growth impacts of absorption of ICT equipment, finding that ICT-related capital deepening contributed 0.2 percentage points to growth in low-income countries, and 0.3 percentage points in low-middle-income countries. The latter is about half the level typically found for industrialized countries.Economic growth;Development;Developing countries;Capital;Economic models;Emerging markets;Information technology;Low-income developing countries;Productivity;Telephone systems;trade data, technological advances, net exports, factor shares, technologies, trade flows, output growth, domestic production, technological change, partner country, technological progress, partner countries, information and communication technologies, world economy, data processing, data processing equipment, economic cooperation, data reporting, trade effect, multiplier effects, data sources, net exporter, imperfect competition, world trade, world growth, global trade, communication technology, trade partners, trade patterns, gross exports, information technologies, global market, information processing, bilateral trade, import tariffs, indirect taxes, commodity trade, bilateral trade flows, computer price, patterns of trade, world exports, information and communication technology

Modeling the Macroeconomic Impact of HIV/AIDS

The paper addresses the impact of HIV/AIDS on per capita output and income, with particular emphasis on the role of labor mobility between the formal and informal sectors, and the impact of the epidemic on investment decisions. The study finds that HIV/AIDS affects both the supply of labor and the demand for labor in the formal sector. Only if there is a significant rise in the capital-labor ratio, will there be an increase in formal sector employment. However, this is associated with a decline in the rate of return to capital. To the extent that companies respond to this by reducing investment, conventional models underestimate the adverse impact on employment, per capita output, and income. The analysis of the impact of HIV/AIDS on output is complemented by an assessment of the impact on income.Economic growth;Southern Africa;hiv/aids, hiv, aids, population growth, population growth rate, birth rates, hiv positive, health services, mortality rates, birth, aids economics, aids prevalence, particular country, medical services, hiv infection, mortality rate, infant mortality, sex workers, aids epidemic