AIDS economic hit
underestimated, report says
Donnelly, Globe Staff, 7/24/2003
-- Scholars have seriously underestimated the economic impact
of HIV and AIDS, which could cause economies in the worst-hit
nations to collapse in two generations unless countries take
urgent steps to fight the disease, according to a World Bank
study released yesterday.
In a series of earlier studies, economists have generally
predicted that AIDS could lead to an annual decline of 1
percent of gross domestic product in nations. But the World
Bank report said that data did not include the long-term
impact of parents' inabilities to invest in children's
education; the loss of transfer of knowledge from one
generation to the next; and lower future productivity, due to
drops in education levels.
The World Bank study also zeroed in on the economy of South
Africa, which accounted for 39 percent of the gross domestic
product of sub-Saharan Africa in 2001 and where roughly 25
percent of adults aged 15 to 49 are infected with HIV. The
report estimated that if AIDS progressed unchallenged, by the
year 2050 -- roughly in two generations -- the per capita
income per family would be half of what it was in 1990,
dropping to $12,901.
Mudunwazi Baloyi, minister of economics at the South
African Embassy in Washington, welcomed the study because it
would help ''sensitize policymakers that there are dangers if
we don't do anything about this epidemic.'' But, Baloyi said,
''This report is coming at a time when the South African
government is taking an active approach to dealing with this
epidemic. One of the interventions is the need for us to
distribute the anti-retroviral medicines, which will prolong
the productive life of individuals.''
South Africa, however, has been a center of controversy for
several years on the issue of AIDS, and international
activists have criticized President Thabo Mbeki for moving too
slowly to combat the epidemic. More than 5 million people are
infected with HIV in South Africa, more than any other nation.
Around the world, an estimated 42 million were infected at
the end of 2002; a worst-case estimate from the World Health
Organization's Commission on Macroeconomics and Health said
that by 2015, 169 million people could be infected.
Jeffrey Sachs, who was chairman of that commission and now
is a special adviser to UN Secretary General Kofi Annan on
reaching goals to reduce global poverty, agreed with the World
Bank study's premise that current indicators underestimate
AIDS' economic impact.
Sachs said another way of measuring AIDS' impact is through
the lens of lifetime earnings. With large numbers of people
dying at young ages from AIDS -- more than 3 million worldwide
died last year -- many families also suffered from the abrupt
loss of wages.
''Since life expectancy has collapsed throughout southern
and eastern Africa, what already has happened is that the
lifetime earnings also have collapsed,'' Sachs said in a
telephone interview from Addis Ababa, Ethiopia. ''You can look
at how much someone is earning in a given year, but in a
lifetime, the income has already gone down 30 to 40 percent in
some places -- in other words, a catastrophe.''
Some global health specialists said the report's
conclusions were not novel. Malcolm F. McPherson, a senior
fellow in development at Harvard University's John F. Kennedy
School of Government, said that the World Bank had belatedly
joined others in recognizing that AIDS was affecting economies
at a greater rate than 1 percent GDP annual loss.
''They have slowly caught up with what is happening in the
field,'' McPherson said. He said the impact can be seen now in
some areas of sub-Saharan Africa suffering from famine, in
which ''the core producers, the farmers, are dying off from
AIDS, and what's happening is that the old and the very young
are the ones surviving. In previous periods when famine hit,
there was a quick response from people who knew what to do.
That isn't happening as much.''
Prabhat Jha, director of the Centre for Global Health
Research at the University of Toronto, expressed caution in
embracing the findings of the study because it differed
greatly from earlier studies, but said his main objection was
that the report ''strikes me as missing the point.''
''Say that we found definitively there was no macroeconomic
impact of HIV in Africa. Would we act differently?'' he said.
''We need to act because it is killing millions of people. So
what is the right question? The right question is, `What are
the numbers of people dying needlessly?' ''
John Donnelly can be reached at
This story ran on page A8 of
the Boston Globe on 7/24/2003.
2003 Globe Newspaper Company.