The Effect of the AIDS Epidemic on Economic Welfare in Sub-Saharan Africa
The existing literature on health and development contains increasing numbers of assessments of relations between health conditions of countries and their per capita GDP, but it has not assessed health as an aspect of economic welfare. Early work of Usher and more recent work of Nordhaus and others has, however, begun to use empirical assessments of what societies appear willing to pay to reduce death rates (e.g. through costly environmental or safety regulations) to allow incorporation of mortality change into measures of changes in economic welfare that are more comprehensive than the rate of change in per capita GDP. This paper applies the method utilized by Nordhaus to assess the contribution of mortality changes in Sub-Saharan Africa to rates of change in economic welfare. Between 1960 and 1990 life expectancy in Africa increased by a very substantial 9 years. The impact was to add between 1.7% and 2.7% per annum to the growth rate of per capita GDP in generating a more inclusive measure of change in economic welfare. The AIDS epidemic, however, is more than reversing these gains: for Africa as a whole the AIDS induced decline in economic welfare was about 1.7% per annum, leading to an overall growth rate of welfare of –2.6% . In countries heavily impacted by AIDS, Bostwana for example, the effect has been to decrease economic welfare by over 8% per year for the past decade.
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