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The Impact of HIV/AIDS on Foreign Direct Investment: Evidence from Sub-Saharan Africa

  • Elizabeth Asiedu

    (Department of Economics, The University of Kansas)

  • Yi Jin

    (Department of Economics, Monash University)

  • Isaac Kalonda-Kanyama

    (Department of Economics, The University of Kansas)

We employ panel data from 40 countries in sub-Saharan Africa over the period 1990-2008 to examine whether HIV/AIDS has a causal effect on FDI. We find that HIV/AIDS has a negative but diminishing effect on FDI, and this adverse effect occurs even when the HIV prevalent rate is as low as 0.1 percent. The empirical result is then rationalized by a simple theoretical model.

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Paper provided by University of Kansas, Department of Economics in its series WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS with number 201207.

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Length: 32 pages
Date of creation: Apr 2012
Date of revision:
Handle: RePEc:kan:wpaper:201207
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  1. McDonald, Scott & Roberts, Jennifer, 2006. "AIDS and economic growth: A human capital approach," Journal of Development Economics, Elsevier, vol. 80(1), pages 228-250, June.
  2. Bloom, David E. & Canning, David & Sevilla, Jaypee, 2004. "The Effect of Health on Economic Growth: A Production Function Approach," World Development, Elsevier, vol. 32(1), pages 1-13, January.
  3. Harsha Thirumurthy & Joshua Graff Zivin & Markus Goldstein, 2006. "The Economic Impact of AIDS Treatment: Labor Supply in Western Kenya," Working Papers 947, Economic Growth Center, Yale University.
  4. Emily Oster, 2012. "Routes Of Infection: Exports And Hiv Incidence In Sub-Saharan Africa," Journal of the European Economic Association, European Economic Association, vol. 10(5), pages 1025-1058, October.
  5. Sebnem Kalemli-Ozcan & Belgi Turan & Chinhui Juhn, 2009. "HIV and Fertility in Africa: First Evidence from Population Based Surveys," 2009 Meeting Papers 650, Society for Economic Dynamics.
  6. Céline Azémar & Rodolphe Desbordes, 2009. "Public Governance, Health and Foreign Direct Investment in Sub-Saharan Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 18(4), pages 667-709, August.
  7. Hansen, Henrik & Rand, John, 2005. "On the Causal Links between FDI and Growth in Developing Countries," Working Paper Series RP2005/31, World Institute for Development Economic Research (UNU-WIDER).
  8. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
  9. M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
  10. R Blundell & Steven Bond, . "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers W14&104., Economics Group, Nuffield College, University of Oxford.
  11. Elizabeth Asiedu & Yi Jin & Boaz Nandwa, 2009. "Does Foreign Aid Mitigate the Adverse Effect of Expropriation Risk on Foreign Direct Investment?," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 200905, University of Kansas, Department of Economics.
  12. Sebnem Kalemli-Ozcan & Belgi Turan, 2010. "HIV and Fertility Revisited," NBER Working Papers 16115, National Bureau of Economic Research, Inc.
  13. Hayakawa, Kazuhiko, 2007. "Small sample bias properties of the system GMM estimator in dynamic panel data models," Economics Letters, Elsevier, vol. 95(1), pages 32-38, April.
  14. Alsan, Marcella & Bloom, David E. & Canning, David, 2006. "The effect of population health on foreign direct investment inflows to low- and middle-income countries," World Development, Elsevier, vol. 34(4), pages 613-630, April.
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