IMPACT OF HIV/AIDS EPIDEMIC ON HUMAN CAPITAL DEVELOPMENT AND ECONOMIC GROWTH IN WEST AFRICA

Abstract

Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome (HIV/AIDS) affects the most productive age group (PAG) in society. The disease hits hardest in sub-Saharan Africa. As at 2012, the prevalence among PAG in the region averaged 4.9%. West Africa bears the third highest burden of the pandemic globally. Prevalence among PAG in the sub-region stood at 0.7%, 2.0%, 1.7% and 1.5% in 1990, 2000, 2010 and 2012 respectively. This however, varied from 3.2% in Côte d’Ivoire to 3.1% in Nigeria and 3.9% in Guinea-Bissau. Studies that examined the macroeconomic implications of the disease have however been limited to its associated costs, demographic and output impacts. This study examined the impact of HIV/AIDS epidemic on human capital development and economic growth in West Africa over the period 1990 to 2011.

The augmented Solow model, rooted in the neoclassical growth theory, was employed. This was operationalised using dynamic panel data modeling approach, with Difference and System Generalized Method of Moments (GMM) estimation techniques. Incidence, prevalence, number of people living with HIV/AIDS (PLWHA) and AIDS related deaths were used to measure HIV/AIDS. Life expectancy and primary school enrolment were employed as human capital measures, while growth rate of real Gross Domestic Product (GDP) per capita was used to capture economic growth. Interactive variable methodology was employed to capture the impact of HIV/AIDS on economic growth through its effects on human capital. To ensure robustness of the parameter estimates, the Hansen, Arellano-Bond autoregressive and Wald tests were carried out. Data were collected from the African Statistical Yearbook, Joint United Nations programme on HIV/AIDS, World Development Indicators, and the World Health Organization. All the estimations were evaluated at the 5% level of significance.

The prevalence of HIV among PAG was 2.2%. It varied between 0.1% and 7.3%. Country-specific trend gave 1990 prevalence in Cote d'Ivoire, Guinea-Bissau, and Nigeria as 5.8%, 0.3% and 0.5% respectively. The 1995 values in these countries stood correspondingly at 7.3%, 0.6% and 2.3%. By 2011, it had declined to 3.4% in Cote d'Ivoire, leaving Guinea-Bissau and Nigeria with increased prevalence of 3.9% and 3.7% in that order. The HIV/AIDS depressed human capital and economic growth in West Africa. A percentage increase in incidence, prevalence, and AIDS related deaths reduced life expectancy significantly by 1.9%, 0.5% and 1.3%, respectively. School enrolment was not significantly affected by the disease. The regressive impact of HIV/AIDS was more pronounced on life expectancy than on school enrolment. A percentage increase in incidence, prevalence, PLWHA, and AIDS related deaths correspondingly reduced growth significantly through their effects on life expectancy by 0.15%, 0.02%, 0.004%, and 0.03%. The impacts of PLWHA and AIDS-related deaths on enrolment lowered economic growth by 0.004% and 0.06% respectively. However, incidence and prevalence did not decrease growth significantly.

Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome affected human capital and economic growth through reduction in life expectancy. There is the need to effectively control the disease in West African countries.

Key Words: HIV/AIDS, Human capital development, Economic growth, Dynamic panel analysis, West Africa.

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