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Economic Impact
[Dr. Shariif: ]
http://www.uwmc.uwc.edu/political_science/IGS_AIDSinAFRICA/economic_impact.htm
Economic
impact.
Assessing the magnitude of the economic impact hinges, of
course, on the difficult task of determining the cause of the
epidemic itself. Based on anecdotal evidence at the household
and firm level, however, a reasonable hypothesis is that the
impact on the productive sectors will be channeled through
changes in the size and quality of the labor force. Given the
scale of the epidemic in some hard hit countries, it is
conceivable that long-run growth in per capita output will be
constrained.
AIDS
predominantly affects adults in their prime sexual and most
productive ages, and unlike many other diseases afflicting
adults in developing countries, it is fatal. Furthermore, this
disease does not spare the occupation of urban elite, who is
arguably among the most productive members of the economy. They
thought that the virus first spread among higher socioeconomic
classes in African countries. Indeed, infection rates in
African urban centers are often double those in rural areas
(AIDS is already the leading cause of adult death in Abidjan,
and about 20 percent of adults are infected).
Formal
Sector.
The spread of AIDS in cities in the developing world has
implications for the development of the service and industrial
sectors, the expansion of the private sector, as well as
capacity-building efforts in countries where human capital is
scare at the firm level, morbidity reduces productivity and
boosts firms’ medical expenses; eventual mortality also means
increased outlays for death benefits. Replacement and
retraining costs in hard-hit industries are already beginning to
escalate.
Agriculture.
The rural sector will not escape the touch of the epidemic,
either. Although infection rates are lower in rural areas,
throughout much of the developing world, most people still live
there, making the absolute numbers of infected persons much
higher. For countries where the bulk of agricultural production
is very labor intensive and grown on smallholder plots,
shortages of able-bodied adults may lower overall agriculture
output. In addition, in the early phases of HIV-related
illnesses, individual productivity will be reduced, other
household members will need to devote time to caring for the
patient, and household resources – otherwise used to purchase
agricultural inputs – may be diverted for medical treatment.
Coping
mechanisms involving labor allocation decisions are not well
understood. The contribution of children’s labor may be
increased as families struggle to maintain current cropping
patterns, and nonessential activities, such as weeding and
pruning, may be curtailed. The key constraint will surface
during periods of peak labor demand. If a household becomes
unable to either supply labor internally or hire temporary
workers, the composition of crops may be altered, and
established patterns of many smallholders indicate that
subsistence needs are usually met first, with marketable crops
grown thereafter. It is conceivable that farmers will
incrementally reduce labor-intensive or cash crops, but the
extent to which this occurs will depend on these types of coping
mechanisms, as well as underlying factors, such as population
density, soil fertility, and rural infrastructure.
Overall, as
was the case with many plagues and epidemics in the past, the
short-term socioeconomic consequences could be severe, but there
will no doubt be adjustments in the long term. Families,
communities, and nations will adapt in an effort to cope with
the increased mortality. If labor becomes a truly binding
constraint, technological changes to save labor will emerge. If
AIDS becomes severe, relative prices will adjust over time, and
as wages get bid up, migration could play an equilibrating
role. What is clear, however, is that more information is
needed not only about the path of the epidemic but also about
how the disease will alter development prospects in individual
countries with differing resource endowments.
Human
capital. One of the most troubling aspects is the
possible implication for human capital formation – a key
ingredient for successful development, as underscored in the
World Bank’s World Development Report 1991. Investing in
people through improved health, education, and nutrition –
particularly women, who constitute half of the developing
world’s population – holds the key to higher productivity and
output in the long run, as well as being a desirable end in
itself. But the AIDS epidemic poses a serious threat to the
further development of human capital, potentially reversing the
gains already made.
Education.
Families with an AIDS illness or death will be less able to
afford school fees, in part because of other expenditures on
medical care, and children may be required to spend more time at
home performing chores normally carried out by adults. In
addition, university students, entering sexually active ages,
are at increasing risk of contracting HIV, and their loss has a
compound effect – not only have many years of education been
foregone, but often limited university positions have been
denied to others, as well.
Health.
Even before AIDS, many developing countries were straining to
improve the general health status of their populations. Now
they must cope with growing demands for hospital beds, health
personnel, and drugs – in some parts of Africa, over half the
occupants in many hospital wards are HIV-positive. The
opportunity costs of temporarily treating illnesses of terminal
AIDS patients could be enormous, as patients with curable
ailments are crowded out. Expensive drugs available to those
suffering with AIDS in industrialized countries are well beyond
the reach of both public sector health care budgets and most
individuals. Expenditures for health care are unlikely to
expand at the same rate as new AIDS cases, despite the desperate
need for them to do so to reach even basic primary health
goals. Costly drugs are not recommended in WHO treatment
guidelines for AIDS. One exception is to fully treat
tuberculosis – a communicable disease now known to increase with
AIDS – to prevent secondary infections.
Food
Security and Nutrition. The links between AIDS,
nutrition, and food security are complex. Extreme weight loss
is one of the key symptoms of AIDS, caused by difficulties in
food intake because of HIV-related illnesses. But
distinguishing between AIDS and acute malnutrition is very
difficult without testing for HIV. This is especially true for
children, as chronic malnutrition (i.e., stunted growth) will
only show up in children over time, and pediatric AIDS cases are
unlikely to live long enough to show signs of stunting.
Even more
disturbing are the indirect effects of AIDS within households on
the food security and the nutritional status of surviving family
members. Because AIDS is spread heterosexually, it is not
uncommon for more than one adult per family to carry the virus.
Household productive capacity, purchasing power, and per capita
food availability are all likely to be reduced in the event of
an adult’s death from AIDS. Disruption – and even dissolution –
of family structures because of AIDS is likely to increase food
insecurity and malnutrition. Extended families that take in
orphans could find food resources spread more thinly.
Women
and children. As heterosexual exposure takes over as
the main mode of transmission worldwide, women and children will
become more and more vulnerable, both as potential AIDS
casualties and as survivors. The implications are quite
serious, given that in many developing countries – particularly
in Africa – women are not only the main providers of care but
also the only largely responsible for food production,
agricultural labor, and the raising of children. The evidence
from Africa increasingly shows that women are more likely to be
infected than men and at an earlier age. This happens, in part,
because women tend to have little controls over the sexual
behavior of their husbands, either in terms of their own
relationships or those outside the union. Moreover, as
mentioned earlier, women infected during peak childbearing years
also expose unborn children to the virus.
Another
cause of deep concern is that by the year 2000, there may be an
estimated five to ten million orphans in Africa alone – a region
that has never had to deal with an orphan problem, thanks to
extended families – on top of the ten million children that are
projected to be infected. Orphanages hold little hope as a
solution because of the sheer numbers involved, and extended
families in parts of Africa are already beginning to feel the
strains; often, the responsibility to feed, clothe, shelter, and
educate the children falls on elderly grandparents, with little
means of financial or physical support. Of growing concern is
the ability of widows and orphans to acquire property rights
(i.e. land) after the death of a male head of household.
Without access to means of production, widows and children may
be forced into petty theft or prostitution to support
themselves.
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