HIV/AIDS and Trend Growth in Africa

This paper provides new evidence regarding the impact of the HIV/AIDS epidemic on trend per capita growth in Africa. Panel data from 35 African countries is used to analyze the impact of HIV prevalence on the components of an augmented neo-classical growth model. Results show that HIV prevalence has a significant negative impact on trend per capita growth and its determinants, but only in high prevalence countries and only in the short run. These results have important policy implications both domestically in high prevalence countries and globally in the context of international funding for HIV/AIDS programmes. * I am indebted to Jeffrey Sheen for his insights on this paper and his excellent supervision. Preface Thesis Title: The Macro-economic Impacts of HIV/AIDS in Africa Supervisor: Jeffrey Sheen Introduction: The macro-economic implications of HIV/AIDS in Africa are not well understood despite the fact that the epidemic has been in existence for almost 30 years. A central issue in this context is the impact of HIV/AIDS on per capita growth. Theoretically, there are a number of different mechanisms through which HIV can impair the production function of an economy, however premature HIV-induced mortality also slows population growth such that the net impact of the epidemic in a standard augmented neo-classical growth framework is indeterminate. Empirical analysis in this topic area was difficult in the early years of the epidemic due to poor epidemiological data, however both the quantity and quality of HIV-related data in Africa has improved considerably in recent years. Thus a comprehensive growth model and supporting empirical analysis is needed to determine the net impact of the epidemic on growth trends in Africa. This in turn will enable policy makers, both domestically in Africa and globally, to respond to the epidemic in a manner that mitigates its negative effects. The thesis is structured as follows: Chapter 1: Introduction Chapter 2: The Determinants of HIV/AIDS in Africa Chapter 3: HIV/AIDS and Growth Chapter 4: The Policy Response to HIV/AIDS in Africa Chapter 5: Appendices The following paper is based on Chapter 3.