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In 2002, about 5 million people contracted HIV, almost 95 percent of them in developing countries. More than 2 million Africans died of AIDS in 2002; 9 percent of adults (15-49) in sub-Saharan Africa have HIV, and the infection rate in four countries in that region exceeds 30 percent. (1)

If these trends continue, HIV/AIDS will further undermine economic growth in developing countries, weakening human capital, discouraging investment, exacerbating poverty, and leaving future generations increasingly vulnerable to the impact of the disease. Economic and social analyses of the epidemic, however, have remained largely descriptive. The lack of prescriptive studies seems to reflect an assumption that with enough resources HIV/AIDS can be conquered once and for all. But, barring a major medical breakthrough, such as a vaccine, this is unlikely and developing countries will have to treat HIV/AIDS like any other long-term threat to public health and welfare.

Setting Criteria for Difficult Choices

With no silver bullet to vanquish HIV/AIDS, the governments of developing countries must equip themselves to make difficult choices that have benefits as well as costs over the long and short term. The impact of HIV/AIDS on economies is complex. To draw conclusions about that impact, governments need concrete data and detailed analysis to help them track the effects of the epidemic, judge the effectiveness of possible responses, and decide among competing priorities. In particular, policymakers need a macroeconomic model and sector-specific economic impact studies to establish baseline projections about the epidemic against which possible responses can be judged.

Building Capacity for Effective Policy Responses

In assisting developing countries in coming to terms with the economic consequences of HIV/AIDS, Nathan Associates first develops a country-specific macroeconomic model to move policy debate onto solid analytical ground and to clarify the effects of the HIV/AIDS epidemic in that country. We then

  • Build the capacity of local civil society to conduct HIV economic impact analyses in various sectors and to import these analyses into the economic model,
  • Build the institutional capacity of the government to manage the impact of HIV/AIDS though the data provided by macroeconomic and microeconomic studies,
  • Develop a responsive strategy for private companies by having them work closely with both the macroeconomic model and microeconomic research teams,
  • Create a synergy-public-private partnership-between the private sector and government, andExtend the reach and effectiveness of donor assistance by working closely with the private sector, in addition to governments, macroeconomic researchers, and local community researchers.

Making Progress in South Africa

The goal of our capacity building is to create and impart to developing country governments a process for research to inform and thereby improve policy responses to the economic impact of HIV/AIDS. We are meeting that goal in South Africa.
With assistance from the USAID-funded Support for Economic Growth Analysis (SEGA) Project and the Mandela Economic Scholars Program, Nathan Associates has studied the macroeconomic impact of HIV/AIDS in South Africa and its economic impact on urban and rural households, construction, small and medium enterprises, social security reform, housing, smallholder agricultural producers, and orphans. The December 2002 edition of the South African Journal of Economics devoted an edition to these studies, and the SEGA project has sponsored a bibliographical source book.

In March 2003, the SEGA project presented its research to the South African Parliament’s Portfolio Committee on Social Development and to numerous government departments. In addition to producing information of great value to policymakers, the project is building local capacity for research. The project team consists entirely of black South Africans who have not been involved in such research before and might not otherwise have had the opportunity to master skills of enduring importance to their community.

Nathan Associates’ HIV/AIDS Economic Impact Studies

  • Common Challenges in Funding the Fight against HIV/AIDS Botswana, Uganda, Thailand, and Brazil
  • The Impact of the HIV/AIDS Epidemic on the University of the Free State: Magnitude, Implications and Management
  • The Impact of HIV/AIDS on the Competitiveness of the Automotive Industry
  • The Economic Impact of HIV/AIDS on the Construction Sector
  • The Impact of HIV/AIDS on the Demand for Low-cost Housing
  • The Impact of HIV on Effective Funding Mechanisms for Transferring Funds to the Provinces for HIV/AIDS Interventions
  • The Impact of HIV/AIDS on High-growth Small and Medium Enterprises
  • The Impact of HIV/AIDS on Income-Earning Urban Household Economies in South Africa: A Township Case Study
  • The Impact of HIV/AIDS on Labor Supply and the Implications for Critical Economic Sectors
  • The Impact of HIV/AIDS on the Need for Shelter and Services
  • The Impact of HIV/AIDS on Rural Households, Smallholder Agricultural Producers, and Orphans
  • Investigating the Income Dynamics of HIV/AIDS-Affected Poor Households: What Role for Comprehensive Social Security Reform?
  • The Labor Market and Poverty Markers of HIV+ Households in South Africa
  • The Macroeconomic Impact of AIDS in South Africa
  • Quantifying the Impacts of HIV/AIDS on the Education System at Local Level: School Survey
  • The Socio-Economic Impact of HIV/AIDS on Children: A Case Study of Orphans and Child-Headed Households
  • The Socioeconomic Impact of HIV/AIDS on Households

1. Joint United Nations Programme on HIV/AIDS and World Health Organization. AIDS Epidemic Update, December 2002.

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