The HIV and AIDS Impact on the Rural and Urban Economy

Economic growth and child welfare are simultaneously affected not only by HIV but also by other economic, military and social events, such as natural disasters, humanitarian conflicts and changes in terms of external trade. Disentangling the individual impact of each of these different effects is complex. It is possible – for instance – that the economic impact of HIV rises more than proportionately with the rise of prevalence. Also, it can be described as having ‘a long wave effect’, manifesting its impact after a time lag of 10 or even 20 years. Thus, countries where the epidemic is in its initial or intermediate stage feel a hardly perceptible impact on growth and poverty, and may therefore postpone the introduction of offsetting measures. Furthermore, the HIV phenomenon generates dynamic intersectoral and intergenerational effects that are not yet well understood or satisfactorily modelled. For instance, in Côte d’Ivoire, HIV prevalence rose initially in the urban sector but then gradually spread to the rural areas. In Yunnan (chapter 6), the epidemic developed initially among ethnic minorities but then spread among the dominant Han population. The impact of such shifts in prevalence on labour supply, aggregate growth, poverty, income distribution and public policy remains largely unexplored.