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GTAP Resource #1922

"The Impact of HIV on Total Factor Productivity"
by Alemu, Zerihun Gudeta, Terry L. Roe and Rodney B.W Smith

This paper examined the potential effects of HIV on factor productivity growth. Using panel data for over 100 countries and nine years, we employ a fixed effect estimation procedure (in first differenced format)to estimate the impact of HIV on total factor productivity growth. We calculate TFP values for over 100 countries. For many countries, HIV poses no current threat to its economic performance, as over 75 countries have HIV prevalence rates less than 1%. For most Southern African countries, however, HIV can have a large negative impact on factor productivity growth. For example, factor productivity growth in Lesotho falls by up to 23%, and for South Africa factor productivity growth falls by up to 15%. Given the impact of HIV on the Southern African countries, we calculated the Harrod neutral rates of technical change for two of these countries – Lesotho and South Africa – and calibrated each country to a single sector, neoclassical growth model with endogenous savings. The models show that, indeed, such TFP effects can have large, negative impacts on the economic performance of these countries. For example, in the presence of HIV, after two generations, per capita GDP in Lesotho is 15% smaller than it would have been if there was no HIV – South Africa per capital GDP would be 10% smaller because of the disease. We also show the impact of the disease on aggregate GDP. Within two generations, Lesotho’s level of aggregate GDP is projected to be 35% smaller in the presence of the disease compared to the no-HIV case – South Africa is projected to be 30% smaller.

Resource Details (Export Citation) GTAP Keywords
Category: 2006 Conference Paper
Status: Published
By/In: Presented at the 9th Annual Conference on Global Economic Analysis, Addis Ababa, Ethiopia
Created: Alemu, Z. (3/7/2006)
Updated: Alemu, Z. (3/7/2006)
Visits: 3,423
No keywords have been specified.

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