AIDS Could Cause Economies in Some Developing Countries To Collapse in Two Generations, World Bank Study Says
July 24, 2003
Previous studies have "seriously underestimated" the economic impact of the AIDS epidemic, which could cause economies in the hardest-hit nations to collapse in two generations, according to a World Bank study released yesterday, the Boston Globe reports (Donnelly, Boston Globe, 7/24). The report, titled "The Long-Run Economic Costs of AIDS: Theory and an Application to South Africa," found that while many economists had predicted that the epidemic would result in a 0.3% to 1.5% drop in African countries' gross domestic products each year, such estimates were flawed in the long term, failing to take into account the impact of education and parenting on the economy, according to Agence France-Presse (Agence France-Presse, 7/23). In contrast, the report says that the economic costs will be much higher. AIDS weakens the economies of African countries in three ways, according to the report. First, the disease mainly affects and kills young adults, removing their salaries and wiping out human capital -- the person's accumulated job and life skills. Second, the deaths of young people weaken or destroy families, ruining the mechanism by which a person passes on human capital to succeeding generations and draining the family resources needed to send children to school. Finally, the chance that the children themselves will eventually contract the disease in adulthood makes personal investment in education seem less important (World Bank release, 7/24). Therefore, while early damage may appear slight, these factors acting in combination could in the long run result in economic collapse (Agence France-Presse, 7/23).
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