Apart from the human suffering, the disease can have serious economic costs, other than the costs of prevention and treatment. HIV/AIDS affects the factors of production of national wealth: labor and physical capital.
Effect on Labor
The disease has a two-fold effect on the supply of labor:
- a decline in absolute numbers, as the death rate increases,
- a decline in the productivity of workers who are affected by HIV.
Effect on Human Capital
HIV/AIDS disproportionally affects the youth, eroding a country's human capital. Without the disease, the youth would continue to stay in the labor force for a long time, building up human capital and expertise.
In Russia by December 2001, 62 percent of the male HIV+ and 57 percent of female HIV+ individuals were between 20 and 30 years of age.
Potential Economic Effects in the Russian Federation
In May 2002, a study of the potential economic effects of an unchecked epidemic in the Russian Federation suggested that, under some scenarios:
- GDP in 2010 would be some 4.15 percent lower. Without intervention the loss would rise to 10.5 percent by 2020. Perhaps more significant for long term development, the uninhibited spread of HIV would diminish the economy's long term growth rate, reducing growth by half a percentage point annually by 2010, and a full percentage point annually by 2020.
- Investment would decline by more than production. In the pessimistic scenario, investment would decline by 5.5 percent in 2010 and 14.5 percent in 2020, indicating a growing impediment to growth.
For further details please see : The Economic Consequences of HIV in Russia - A Computer Based Model
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