Economic Report of the President

Academic research has found evidence of these effects and has documentedstill other effects of HIV/AIDS on individual families. One study finds thatin Uganda, HIV/AIDS increases the proportion of female-headed householdswho are living in poverty. Another study finds that, in parts of Kenya, childrenin affected families sometimes have no caregivers in their households and“manage their own household activities without the supervision of an adult.”Research conducted in South Africa shows that affected households allocatemore resources to food, health, and rent and less to education and clothingthan nonaffected households, providing evidence that HIV/AIDS is placingconstraints on an entire generation’s capacity to pursue education and higherincome in the long run.Macroeconomic ImpactsThe aggregated effects of HIV/AIDS on individual households can createserious macroeconomic consequences. Because decreased mortality andincreased education are two of the most significant factors in determiningeconomic growth, the HIV/AIDS epidemic has the potential to threaten theeconomic well-being of entire societies. As discussed in the previous section,the disease can decrease the overall level of skills in the workforce through anumber of mechanisms, because skilled workers die of AIDS, children dropout of school, and firms and individuals invest less in human capital. This lossof worker skills and capacity reduces economic growth. The disease can alsodecrease productivity and distort labor market decisions, further slowingeconomic development.Although there is still a dearth of data documenting these effects, severaleconomic models estimate reductions in economic growth rates for Africancountries. Recent studies tend to find more significant impacts than previousestimates, most likely because the macroeconomic impacts become increasinglymeasurable as the disease affects a larger proportion of households,workers, and employers. A report published in 2004 estimates that, over theperiod from 1992 to 2002, HIV/AIDS, on average, reduced the rate ofeconomic growth in 33 African countries by 1.1 percent per year. This studyreports that by 2020, Africa alone could incur a loss of US $144 billion.Getting Prevention, Treatment,and Care to the FieldCombating the HIV/AIDS pandemic requires both a reduction in newinfections and adequate treatment and care for those already infected.Interventions in countries such as Kenya, the Dominican Republic, Thailand,Cambodia, and, most notably, Uganda, that have promoted risk avoidance162 | Economic Report of the President