Masters Degrees (Economics)

Permanent URI for this collection

https://scholar.sun.ac.za/handle/10019.1/713

Browse

Browsing Masters Degrees (Economics) by Subject "AIDS (Disease) -- Economic aspects -- South Africa"

Now showing 1 - 1 of 1
  • Thumbnail Image
    Item
    The macro-economic impact of HIV/AIDS in South Africa
    (Stellenbosch : Stellenbosch University, 2002-12) Visagie, Linette (Linette Louise); Smit, B. W.; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Economics .
    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.