The economy wide impact of HIV/AIDS and the funding dilemma in Africa: Evidence from a dynamic life cycle horizon of Uganda

Judith Kabajulizi, Mthuli Ncube

Research output: Working paper

Abstract

HIV/AIDS compared to the rest of the word. This paper analyses the long-term economic effects of HIV/AIDS using a computable general equilibrium (CGE) model. Taking Uganda as a case study for analysis, the paper aims to predict the economic impact of HIV/AIDS through: (i) the human resource channel and, (ii) the source of fiscal space for HIV/AIDS channel, and proposes policy options for funding HIV interventions in the long-term. The paper shows that if the government intervenes by scaling up treatment and prevention of HIV, the negative economic impacts of HIV/AIDS – including the soaring cost of production due to rising wages, declining GDP growth rates relative to the base, and the rising domestic debt as share of GDP – are reversed. The economy thrives from a growing labour force supply and resource flows to HIV interventions. Foreign-aid and direct taxation are both potential sources of fiscal space for HIV albeit with differential impacts on sectoral growth and government debt levels. The study demonstrates that low-income-countries (LICs) like Uganda have the capacity to mobilise domestic resources to fund HIV interventions by increasing revenues from direct taxes. It is recommended that policymakers – in Uganda and other LICs grappling with similar challenges – devise means to increase revenue from direct taxes particularly by tapping into the large informal sector. The paper also proposes that in the short to medium term, development-aid for health be increased in order for government to meet the future HIV/AIDS obligations. Overall, the research findings strengthen the case for policy makers to frontload investment in HIV treatment and prevention.
Original languageEnglish
Place of PublicationOxford
PublisherBlavatnik School of Government, University of Oxford
Pages1-32
Number of pages32
Publication statusPublished - Sep 2015

Publication series

NameBSG Working Papers
PublisherBlavatnik School of Government, University of Oxford
No.BSG-WP-2015/006

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Keywords

  • Computable General Equilibrium
  • Disease
  • Treatment
  • Prevention
  • Policy
  • Development
  • Growth
  • HIV
  • Uganda

Cite this

Kabajulizi, J., & Ncube, M. (2015). The economy wide impact of HIV/AIDS and the funding dilemma in Africa: Evidence from a dynamic life cycle horizon of Uganda. (pp. 1-32). (BSG Working Papers; No. BSG-WP-2015/006). Oxford: Blavatnik School of Government, University of Oxford.