Economic Impact of AIDS

Many of you responded to my blog entry, "World AIDS Day 2008," discussing HIV/AIDS and ways to prevent the spread of this deadly disease. One of the purposes of this blog is to discuss the challenges people face in developing nations and how economic and private sector development can serve as a solution to resolving many of the world's human crises. A preliminary step is diagnosing and examining the problem before formulating sustainable solutions. Although we realize the human costs of AIDS, particularly in the developing world, we may not understand the economic impact of AIDS.

Breakdown of the Family Structure

In many countries, women are the primary caregivers in their households. What happens to the family structure when the father infected with AIDS? Who will provide the source of income? Conversely, who takes care of the children when the mother becomes ill or dies? Although many families in Africa, Asia, and Latin American tend to be extended with several potential caregivers, providing economic security or household stability is threatened when multiple members of the family are coping with HIV/AIDS.

According to the 2008 Report on the Global AIDS Epidemic produced by the Joint United Nations Programme on HIV/AIDS (UNAIDS), "In addition to being more physiologically and socially vulnerable to infection, women also disproportionately suffer the epidemic’s negative effects. As the primary caregivers in Africa and other regions, women have seen their household and community burdens grow as a result of HIV, often compromising their health, their ability to generate income, and other markers of well-being. Women account for two thirds of all caregivers for people living with HIV in Africa. Women who are widowed as a result of HIV are at high risk of becoming destitute as a result of legal regimes that fail to recognize or protect women’s right to inherit property."

AIDS Creates a Welfare System

Many developing countries are trying to use donor funds from agencies like the United Nations United Nations Development Program (UNDP), The World Bank and the Bill & Melinda Gates Foundation to provide individuals with the education and technical training necessary for economic development and financial independence. As a result of the collapse of the family structure resulting from AIDS, however, limited financial and human resources are transferred from economic development programs to provide for the needs for millions of orphans impacted by AIDS.

Furthermore, according to UNAIDS, "In sub-Saharan Africa, nearly 12 million children under age 18 have lost one or both parents to HIV. In Botswana and Zambia, an estimated 20% of children under 17 are orphans, with most orphaned as a result of HIV. Zimbabwe reports that 24% of its children (ages 0–17) have lost one or both parents to HIV." Although many agencies should be commended for their efforts in raising orphans impacted by AIDS, these agencies often do not have adequate resources to provide a proper education or technical training required to achieve economic independence and break the cycle of poverty.

Growing Economic Divide in Developing Nations

Until just a few months ago, a few developing countries with significant populations infected with HIV had experienced strong economic growth. The UNAIDS report states, "With one of the highest HIV burdens in the world, Botswana nevertheless experienced average economic growth of 4.8% between 1990 and 2005. Likewise, economic growth in heavily affected Uganda in 1990–2005 actually increased over rates reported for 1975–1990, even as HIV was responsible for more than 100 000 deaths per year. South Africa, home to the largest population of people living with HIV, has enjoyed robust economic growth since 1999. Certain heavily affected countries—including Kenya, Zambia, and Zimbabwe—experienced negative economic growth in 1990–2005, but it is difficult to link this weak negative performance to HIV."

Having traveled to many countries where AIDS is part of the daily lives of its citizens, I have seen the positive impact resulting from strong economic growth. Creating an economic divide is a major threat HIV poses in several developing markets. While some people in developing nations will prosper financially, HIV will also increase the poverty rate. The UNAIDS report further explains, "Even within economies that are steadily growing, HIV can create a 'poverty trap' that ensnares the most vulnerable. Given the heavier burdens borne by poor households, HIV also widens inequality within societies, which may increase vulnerability to HIV in the future...Ironically, the sickness and death of skilled workers may also increase inequality by reducing overall labour demand and leading to a fall in the wages of unskilled workers....It is estimated that HIV imposes an additional US$2 billion in costs each year on affected households in Asia" There is a growing concern on how HIV will impact the economies of India and China.

The Impact of AIDS on Donor Countries

President-elect Barack Obama said that his budget proposal will call for an increase in foreign aid for humanitarian purposes and as a United States citizen and taxpayer, I support this proposal. For those of us who reside in nations that provide foreign aid to the developing world, our tax revenue will be spread thin between supporting economic development projects and providing funding to agencies that care for individuals impacted by AIDS.

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.