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Is HIV/AIDS Undermining Botswana’s ‘Success Story’? Implications for Development Strategy

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  • Thurlow, James

Abstract

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 the growth and distributional impact of the HIV/AIDS pandemic and considers its implications for the country’s development prospects, using a dynamic computable general equilibrium and microsimulation model that accounts for the cost of treatment. The results of this analysis indicate that HIV/AIDS reduces GDP growth by 1.6 percent, increases the absolute poverty headcount by 1.5 percentage points and disproportionately hurts labor-intensive manufacturing. Therefore, while mining has dominated the recent slowdown in Botswana’s growth, the present findings suggest that HIV/AIDS is undermining economic diversification. Although providing treatment is projected to reclaim a quarter of the lost growth and a third of the poverty caused by the pandemic, the fiscal burden of treatment will constrain diversification, thus underscoring Botswana’s need for development assistance. Furthermore, focusing resources toward treatment may worsen inequality, since the primary beneficiaries will be middle-income and urban households. Therefore, while HIV/AIDS is undermining Botswana’s success story, both unemployment and a stagnant rural economy will remain binding constraints against further propoor development.

Suggested Citation

  • Thurlow, James, 2007. "Is HIV/AIDS Undermining Botswana’s ‘Success Story’? Implications for Development Strategy," IFPRI Discussion Papers 42417, CGIAR, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:ags:iffpr5:42417
    DOI: 10.22004/ag.econ.42417
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    1. Ms. Silvia Sgherri & Mr. Maitland MacFarlan, 2001. "The Macroeconomic Impact of HIV/AIDS in Botswana," IMF Working Papers 2001/080, International Monetary Fund.
    2. Clive Bell & Shantayanan Devarajan & Hans Gersbach, 2003. "The long-run economic costs of AIDS : theory and an application to South Africa," Policy Research Working Paper Series 3152, The World Bank.
    3. World Bank, 2001. "Botswana : Selected Development Impact of HIV/AIDS," World Bank Publications - Reports 15536, The World Bank Group.
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