Economic Impact of HIV/AIDS Burden on Growth in Selected Sub-Saharan Africa (SSA) Countries : Evidence from a Dynamic System GMM Estimates

This paper applies a two-step dynamic BBS-GMM panel estimation technique alongside with the Diebold and Yilmaz (2012) index variance decomposition approach. This was done to achieve conditional convergence in the growth equation and also to disaggregate the shock due to the epidemic prevalence. Various diagnostic tests were employed to include: windmeijer (2005) finite sample correction for standard errors, test of stationarity; controlling for heterogeinety, endogeneity and/or omitted variable biases, Hansen J-statistic for identification, Diff-in-Hansen test for validity of the additional moment restrictions, Breusch-Pagan Lagrange multiplier (BPLM), Hausman tests for acceptability or otherwise of the RE model etc. The study, while utilizing cross-country series of 18 countries in the sub-region for the period of 1986-2017, empirically examined the impact of HIV/AIDS on economic growth. Apparently, the choice of the selected 18 SSA countries was anchored on factors such as: degree of epidemic prevalence, level of economic growth and four major sub-regional blocs: SADC, ECOWAS, CEMAC and COMESA. Regrettably, the study found a link between the epidemic prevalence and poverty. Currently, 13% of total population workforce in the region lives with the epidemic; meaning that one in every ten adults in the region is HIV/AIDS positive. A substantial increase in the prevalence of HIV/AIDS, leads to not only impacting negatively on human capital development and output growth in the region but also transmits the epidemic burden amongst the member states, thereby, rendering the entire region vulnerable. The result shows that the low income countries are the most affected. It equally found prevalence rate and income level of a country as factor determinants of the level of her vulnerability. The study recommends that since members of SADC sub-region with the highest prevalence rates are seen as powerful vector of contagion; therefore, a good understanding of cross-border epidemic shock (spillovers) on growth within the region becomes pertinent for policy coordination in the areas of preventive measures. Lastly, it was also recommended that the region should drive growth process as a unit