Policy Briefs on THE

ECONOMIC IMPACT OF HIV

Impact of HIV

Brief 5: Capital and Investment

By Markus Haacker, Kate Harris, Gesine Meyer-Rath

September 2021

Key Points

  • The direct effects of health-related productivity shocks on economic output are magnified by their negative impact on investment. Poorer health decreases productivity, which results in lower economic output and consequently lower investment, which again reduces productivity and output over time.

  • Higher mortality reduces incentives for saving and investment. Empirical studies (not HIV-specific) suggest that this could be an important link between HIV and growth, but there is no clear evidence on such drops in savings and investment in countries facing a large HIV burden.

  • Some HIV-related spending may “crowd out” capital investment which would occur if the funds were used differently. However, to the extent that spending on the HIV response contains investment, the net effect on investment and capital accumulation is mitigated and could even be reversed.

Technical Briefs

The technical briefs provide more detail on the evidence available on each of the topics.

1. The State of Programme Implementation to Reduce HIV Transmission & Aids-Related Mortality

2. Increased Health and Life Prospects and Their Economic Valuation

3. HIV, Population Dynamics and the Labour Force

4. Human Capital

5. Capital and Investment

6. Productivity and Employment of People Living with HIV

7. Economic Growth – Overview

8. Interactions Between HIV and Poverty

9. Disease Burden Across Population Sub-Groups

10. Trade-offs between Allocation to Health and Other Sectors

11. Domestic Public Funding for HIV

12. Trade-offs and Synergies between HIV and Other Health Objectives

13. Assessing Cost Effectiveness Across HIV and Health Interventions

14. External and Domestic Health Financing, and the Role of Public vs. Private Domestic Health Funding

15. Public and Private Provision of Health and HIV Services

16. Trade-offs within the HIV Budget

17. The Economics of HIV and of HIV Programmes in the Era of Covid-19

Brief 5: Capital and Investment

By Markus Haacker, Kate Harris, Gesine Meyer-Rath

September 2021

Key Points

  • The direct effects of health-related productivity shocks on economic output are magnified by their negative impact on investment. Poorer health decreases productivity, which results in lower economic output and consequently lower investment, which again reduces productivity and output over time.

  • Higher mortality reduces incentives for saving and investment. Empirical studies (not HIV-specific) suggest that this could be an important link between HIV and growth, but there is no clear evidence on such drops in savings and investment in countries facing a large HIV burden.

  • Some HIV-related spending may “crowd out” capital investment which would occur if the funds were used differently. However, to the extent that spending on the HIV response contains investment, the net effect on investment and capital accumulation is mitigated and could even be reversed.

Technical Briefs

The technical briefs provide more detail on the evidence available on each of the topics.

1. The State of Programme Implementation to Reduce HIV Transmission & Aids-Related Mortality

2. Increased Health and Life Prospects and Their Economic Valuation

3. HIV, Population Dynamics and the Labour Force

4. Human Capital

5. Capital and Investment

6. Productivity and Employment of People Living with HIV

7. Economic Growth – Overview

8. Interactions Between HIV and Poverty

9. Disease Burden Across Population Sub-Groups

10. Trade-offs between Allocation to Health and Other Sectors

11. Domestic Public Funding for HIV

12. Trade-offs and Synergies between HIV and Other Health Objectives

13. Assessing Cost Effectiveness Across HIV and Health Interventions

14. External and Domestic Health Financing, and the Role of Public vs. Private Domestic Health Funding

15. Public and Private Provision of Health and HIV Services

16. Trade-offs within the HIV Budget

17. The Economics of HIV and of HIV Programmes in the Era of Covid-19

Wits Health Consortium, University of the Witwatersrand