15th International AIDS Conference Bangkok, Thailand — July 11-July 16, 2004

Int Conf AIDS. 2004 Jul 11-16;15:Abstract No. LbOrD30

B Cisse, B Ventelou
Inserm, Marseille, France

BACKGROUND/OBJECTIVES: To evaluate the macroeconomic impact of AIDS in African economies; to evaluate the macroeconomic effect of a better access to HIV treatment (price reduction in ARV therapies)

METHODS: A dynamic "computable general equilibrium model" (Dynamic-CGEM), specifically designed for analyzing the growth process with multiple factors of accumulation, including human capital. We use the epidemic projection of AIM software (UNAIDS) and ETAPSUD price index of ARV treatment.

RESULTS: The model is calibrated on Angola, Benin, Cameroon, Central African Republic and Cote d'Ivoire. The average reduction in GNP is estimated by the difference with the GNP "without AIDS" (as if the prevalence rate was set at zero). The average reduction of GNP is above 10 % for four countries in 2010. An involution trap appears in Cameroon with a negative shock, evaluated up to 25% in 2010. A (by hypothesis) reduction of treatments price of fifty percents interrupts the involution path: the GDP loss is 17%.

CONCLUSION: The introduction of human capital in the macroeconomic analysis and the interaction between agents' decisions on production factors create potential bifurcations for the balanced-growth path of the more fragile economies. For a realistic set of parameters and elasticities, a trap phenomenon turns out to be plausible in face of an epidemic shock: households and firms are together entering in an involution process. The example of Cameroon is particularly interesting and dramatic: the development process is blocked by the shock and the net GDP-loss is far higher than anticipated by previous macroeconomic studies. The action of the government should have to be designed knowing this risk, giving preference to human capital intervention: health and educational spending. Last, expanding ARV therapies to a large part of the population of workers could be more cost-efficient than initially evaluated (macro-economically speaking, i.e. considering the risk of an involution trap and the possibility to escape from it).

040711
LbOrD30

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