Macroeconomic impact of HIV: the need for better modelling.

Economics

Macroeconomic impact of HIV: the need for better modelling.

This review critically evaluates the recent literature on macroeconomic repercussions of the HIV pandemic and the response to it, focusing on the impacts of HIV through both its health consequences and its impact on the accumulation of human capital. So far, most studies have found a moderate impact of the HIV epidemic on macroeconomic growth. However, recent studies tend to emphasize the fact that HIV undermines human capital and implies a long-term detriment for economic development. Availability of data from Demographic and Health Surveys offers opportunities for better understanding the relationship between the HIV epidemic and economic growth through pathways linking its microeconomic and macroeconomic impacts. The macroeconomic impact of HIV observed so far appears moderate. The authors’ analysis of recent literature, however, points out three important issues that may have been previously underestimated. First, the most important effects may occur in the longer run, through changes in the accumulation of human capital. Second, aggregate impact often masks an unequal impact among different economic groups. Third, the empirical evidence on which current macroeconomic models are based remains weak, in particular in the way it takes into account responses to HIV at the households' level. Micro-simulation models and the recently increasing availability of robust datasets at households' level offer promising opportunities to address these issues.

As this review demonstrates, significant work has gone on over the last 20 years to quantify and qualify the health impact of HIV in economic and financial terms. More recently, given the increase in total resources for HIV from 59 million USD in 1987 to 13.8 billion USD in 2008, attention has turned to the macroeconomic consequences of aid flows. In addition, the consequences of the HIV epidemic on human capital accumulation have been explored. Human capital refers to the skills or knowledge that make people more productive or more able to perform complex tasks. Premature mortality and decreased investment in the education of remaining family members are two examples of how HIV reduces human capital. Further work will explore the individual data of the Demographic and Health Surveys to better understand household impacts. However, arguments that might move policy makers would be those that turn the table to better predict the economic and financial impact of programme scale-up to achieve universal access to HIV prevention, treatment, care and support. There is no longer any doubt that health is a key determinant of economic development and poverty reduction rather than simply a by-product of economic growth. Showing through modelling what the efficiency trade-offs are in scaling-up the HIV response can inform decisions about HIV prevention and treatment programmes that will have both economic and financial impact.