The patterns of AIDS' effects on growth and human capital : evidence from Africa and theory

The paper presents empirical evidence of AIDS epidemic effects on demography variables and accumulable factors. Using a panel of 47 Sub-Saharan African countries, we show that AIDS has negative and significant effect on life expectancy and fertility rate. Thus, a one percent increase in AIDS prevalence rate leads to a decrease of one month every year of the life expectancy in average. We also show that AIDS has a negative effect on investment rate, capital intensity and primary and secondary enrollment rate. However, we cannot find a global effect of AIDS on GDP per capita. This outline the difference between the short run and direct effect of AIDS and the long run indirect effect of the epidemic. Then, we propose a model that exhibits the poverty trap property the epidemic have. Our model is an OLG economy which highlight the effect of AIDS related health expenditures on life expectancy.