Is HIV-AIDS Undermining Botswana’s ‘Success Story’ Implications for Development Strategy Report as inadecuate

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Despite its strong growth record, Botswana faces two prominent development challenges:the onslaught of HIV/AIDS and the slowdown in diamond mining. This study estimates thegrowth and distributional impact of the HIV/AIDS pandemic and considers its implications forthe country’s development prospects, using a dynamic computable general equilibrium andmicrosimulation model that accounts for the cost of treatment. The results of this analysis indicatethat HIV/AIDS reduces GDP growth by 1.6 percent, increases the absolute poverty headcount by1.5 percentage points and disproportionately hurts labor-intensive manufacturing. Therefore,while mining has dominated the recent slowdown in Botswana’s growth, the present findingssuggest that HIV/AIDS is undermining economic diversification. Although providing treatment isprojected to reclaim a quarter of the lost growth and a third of the poverty caused by thepandemic, the fiscal burden of treatment will constrain diversification, thus underscoringBotswana’s need for development assistance. Furthermore, focusing resources toward treatmentmay worsen inequality, since the primary beneficiaries will be middle-income and urbanhouseholds. Therefore, while HIV/AIDS is undermining Botswana’s success story, bothunemployment and a stagnant rural economy will remain binding constraints against further propoordevelopment.

Subject(s): Health Economics and Policy

Issue Date: 2007

Publication Type: Working or Discussion Paper

PURL Identifier:

Total Pages: 40

Series Statement: IFPRI Discussion Paper


Record appears in: CGIAR > International Food Policy Research Institute (IFPRI) > IFPRI Discussion Papers

Author: Thurlow, James


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