Disease dynamics and economic growth

HIV prevalence dynamics are introduced into a three sector, neoclassical growth model. The model is calibrated to South African national accounts data and used to examine the potential impact of HIV/AIDS on economic growth. Projections portend that, if left unchecked, the long run impact of HIV/AIDS could cause South African GDP to be about 60% less than would be the level of GDP in the absence of the disease. In spite of a relatively high death rate, the disease is also found to decrease the per capita level of GDP, due mostly to a decline in labor productivity and a corresponding slower growth in capital deepening.