Instructor Stephanie Webb
August 16, 2010
HIV/AIDS and Its Effects on Economic Growth
For most developing countries, the main source of progress is through industry and domestic saving. In order for industry to be a viable source of progress, the country must have a large, productive workforce. Certain elements may stymie growth, leading to a slow down in development and, by proxy, a stalled economy. For developing countries across the globe in 2006 disease was the biggest problem. In some African countries, HIV/AIDS pandemic has infected up to 40 percent of the adult populations. Worldwide, the HIV/AIDS virus affects 40 million people (Case, Fair, Oster, 2009). This has a very dramatic effect on the economies of these countries.
In a country heavily plagued by the HIV/AIDS virus, industry is slowed, reducing the amount of capital available. Adding to that is the loss of capital that is diverted from other aspects of the government to the care and treatment of those infected with the HIV/AIDS virus. According to the United Nations, the HIV/AIDS epidemic can affect the economy in a number of ways:
1. • The AIDS epidemic will slow or reverse growth in the labour supply. The economic impact can vary according to the sector of the economy, the degree to which HIV/AIDS affects hard-to-replace skilled labour and whether or not there is a substantial pool of “surplus labour”. 2. • Savings and investments of families will be reduced owing to the increase in HIV/AIDS-related health expenditures. If children’s education, health and nutrition suffer as a result, prospects for longer-run economic growth and development will decline. 3. • The AIDS epidemic may also divert public spending from investments in physical and human capital to health expenditures, leading over time to slower growth of the gross domestic product. Foreign and domestic private investment might
References: Case, K. E., Fair, R. C., & Oster, S. M. (2009). Principles of Microeconomics, (9th ed.) Upper Saddle River, NJ: Pearson Prentice Hall. Dixon, S. (2002). The Impact of hiv and aids on africa 's economic development. Retrieved from http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1122139/ United Nations Department of Economic and Social Affairs/Population Division, Initials. (n.d.). The Impact of hiv/aids epidemic on macro-economy and development. Retrieved from http://www.un.org/esa/population/publications/AIDSimpact/91