Understanding the development impact of AIDS in Africa: a brief overview

Abstract

HIV/AIDS is a serious challenge to economic development. Increasing morality and morbidity reduce living standards directly, and they have repercussions that affect all areas of the economy. Individuals and households face increasing risks, both directly through the risk of infection, and indirectly, as formal, and informal social insurance mechanisms are eroded. Companies face productivity losses and increasing costs of medical, and death related benefits. On the macroeconomic level, economic growth declines, as the population grows more slowly, and as reduced national savings, rising costs, and declining economic prospects deter investment. In this context, the present paper is concerned with the implications of HIV/AIDS for government finance and public services. While governments' capacities are diminished by increasing morality, and domestic revenues are slowing down, the demand for certain government services, most notably in the health sector, expands. Along these lines, we are going to address three broad questions: What is the impact of HIV/AIDS on government employees, personnel costs, and the efficiency of public services? What are the implications of HIV/AIDS for public policy, and what are the fiscal consequences? What is the impact of HIVIAIDS on government revenues?