The macro-economic impact of HIV/AIDS in South Africa

Visagie, Linette (Linette Louise) (2002-12)

Thesis (MComm)--Stellenbosch University, 2002.

Thesis

ENGLISH ABSTRACT: South Africa faces one of the world's most severe HIV/AIDS epidemics. Whereas the disease was initially only regarded as a serious health crisis, it is now clear that the epidemic will also have economic repercussions. The objective of this study is to project the extent of the macro-economic impact of HIV/AIDS in South Africa over the next 10 to 15 years. The study commences with a discussion of the key characteristics of HIV/AIDS and the current status of the epidemic in South Africa. The demographic inputs used are based on projections produced by the HIV/AIDS model of Metropolitan Life (the Doyle model). The methodology and key assumptions behind the Doyle model are described briefly, after which the demographic projections are presented and discussed. The paper contains a summary of previous approaches to modelling the economic impact of HIV/AIDS, as well as a presentation and discussion of their simulation results. In reviewing the available literature on the economic impact of HIV/AIDS, it becomes apparent that researchers have not yet reached consensus on the economic impact of HIV/AIDS in South Africa - estimates of the impact on GDP growth range anywhere between a reduction of 0.3 and 2.0 percentage points over the next 10 to 15 years. The approach that is used in modelling the economic impact of HIV/AIDS in this study comprises the following: Firstly, a no-AIDS forecast of the South African economy is generated using the annual macro-econometric forecasting model of the Bureau for Economic Research. Secondly, the channels through which the epidemic would likely impact on the economy are identified and modelled. These include slower growth in the population and the labour force; higher employee benefit contributions by employers and employees; indirect costs to the private and public sectors (e.g. lower productivity and higher recruitment and training costs); and higher health and welfare expenditure by the government, as well as an increase in tax rates. The economic effects of each impact channel are analysed independently, after which the different impact channels are combined in the model for the aggregated AIDS inclusive simulation. The results are presented in the form of comparisons between "no-AIDS" and "AIDS" projections for key economic variables for the period 2001 to 2015. The paper also contains results from a macro-economic sensitivity analysis, in which seven of the key assumptions are altered in order to test the sensitivity of the model to these changes. Simulation results indicate that the epidemic will have a negative impact on economic growth in South Africa - real GDP growth could fall from a projected average of 3.7% over the period 2002-2015 without HIV/AIDS to between 3.4% and 3.1 % per year with HIV/AIDS. In contrast, real per capita GDP growth is projected to be 0.7 to 1.0 percentage points higher compared to a no-AIDS scenario, as the adverse impact of the epidemic on the population will outweigh the negative impact on real GDP.

AFRIKAANSE OPSOMMING: Suid-Afrika staar een van die wêreld se ernstigste MIV/VIGS epidemies in die gesig. Aanvanklik is die siekte slegs as 'n erge gesondheidskrisis beskou, maar vandag is dit duidelik dat die epidemie ook ekonomiese gevolge sal hê. Die oogmerk van hierdie studie is om die omvang van die makro-ekonomiese impak van MIV/VIGS oor die volgende 10 tot 15 jaar in Suid-Afrika te beraam. Die proefskrif begin met 'n bespreking van die belangrikste eienskappe van MIV/VIGS en die huidige stand van die epidemie in Suid-Afrika. Die demografiese insette wat gebruik word, is gebaseer op projeksies van Metropolitan se MIV/VIGS model (die Doyle model). Die metodiek en die sleutel aannames van die Doyle model word kortliks bespreek, waarna die demografiese projeksies aangebied en bespreek word. Die studie bevat 'n opsomming van benaderings wat van te vore gebruik is om die ekonomiese impak van MIV/VIGS te modelleer, asook 'n voorlegging en 'n bespreking van hul resultate. 'n Oorsig van beskikbare literatuur oor die ekonomiese impak van MIV/VIGS bring aan die lig dat daar in werkilikheid nog geen konsensus oor die omvang van die impak op die Suid-Afrikaanse ekonomie bereik is nie. Beramings van die impak op BBP groei oor die volgende 10 tot 15 jaar wissel van 'n vermindering met 0.3 tot 2.0 persentasie punte. Die benadering wat in hierdie studie gevolg word om die ekonomiese impak van HIV/VIGS te modelleer behels die volgende: Eerstens word 'n vooruitskatting van die Suid- Afrikaanse ekonomie sonder MIV/VIGS gegenereer met die hulp van die makroekonometriese vooruitskattings model van die Buro vir Ekonomiese Ondersoek. Die tweede stap behels die identifisering en die modellering van die verskillende kanale waardeur die epidemie moontlik die ekonomie kan affekteer. Dit sluit onder andere die volgende in: stadiger groei in die populasie en die arbeidsmag; hoër bydraes deur werkgewers en werknemers aan werknemer-bystandfondse; indirekte onkostes vir die privaat en openbare sektore (bv. laer produktiviteit en hoër werwings- en opleidings koste); 'n toename in staatsbesteding op gesondheids en welsyns dienste; asook 'n styging in belastingkoerse. Die ekonomiese implikasies van elkeen van die kanale word individueelontleed, waarna die verskillende kanale saamgevoeg word vir die oorkoepelende simulasie. Die resultate word aangebied in die vorm van vergelykings tussen "geen-VIGS" en "VIGS" projeksies vir sleutel ekonomiese veranderlikes oor die periode 2001-2015. Die proefskrif bevat ook 'n voorlegging van die resultate van 'n makro-ekonomiese sensitiviteits ontleding, waarin sewe van die sleutel aannames verander is met die doelom die gevoeligheid van die model vir hierdie veranderinge te bepaal. Die resultate toon dat die epidemie 'n negatiewe uitwerking op ekonomiese groei in Suid-Afrika sal hê - die gemiddelde groeikoers in die reële BBP oor die periode 2001-2015 mag daal van 'n geprojekteerde 3.7% sonder MIV/VIGS tot tussen 3.4% en 3.1 % met MIV/VIGS. In teenstelling toon die resultate dat die gemiddelde groeikoers in per capita reële BBP tussen 0.7 en 1.0 persentasie punte hoër mag wees vergeleke met die "geen-VIGS" scenario. Die toename in per capita BBP groei kan toegeskryf word aan die skerp daling in die groei van die populasie as gevolg van MIV/VIGS.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/53135
This item appears in the following collections: