AIDS and the Accumulation and Utilisation of Human Capital in Africa

Education is one of the great challenges of development. This paper outlines the likely effects of the AIDS pandemic in Africa on the continent's ability to produce education and use it effectively for growth and poverty reduction. Four channels are explored. First, a supply effect: the deaths of millions of adults will increase the difficulty of finding and retaining enough teachers. Secondly, a demand effect: the foreshortening of time horizons will reduce lifetime private returns to education, making investments of time and money in schooling appear less attractive. Thirdly, a factor productivity effect: in many countries the loss of a large share of the skilled work force may reduce the social returns to skill among educated people who survive, reducing the contribution of education to overall growth. And finally, a factor complementarity effect: the loss of physical capital assets may reduce the ability of skilled workers to contribute to overall economic production, to the extent that physical and human capital are complementary inputs. The channels described add up to the qualitative conclusion that among the costs of the epidemic is the likelihood that, absent offsetting policies and programmes, Africa's dearth of human capital will get worse. Copyright 2004, Oxford University Press.