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Adam Smith in Reverse

AIDS and Foreign Investment in South Africa

Timothy Hagen
Professor Raman
Economics 326
November 6, 2001
Research Paper

I have neither given or received, nor have I tolerated others' use of unauthorized aid.

Timothy Hagen

South Africa is a country fabulously rich in natural and human resources.

Producing much of the world's diamonds and gold, and with pools of both highly-skilled
and cheap labor, South Africa accounts for a third of Africa's economic output.1 Since the
end of apartheid, foreign investors have been eager to invest in South Africa. Companies
such as Ford and DaimlerChrysler have set up factories in South Africa. Investors from
Great Britain alone have 12 billion invested in the country.2 These investors are lured by
the relative stability and the resources of the South African economy.
Yet the prevalence of Human Immunodeficiency Virus (HIV) and Acquired
Immunodeficiency Syndrome (AIDS) in South Africa may change investors' views. The
prevalence of HIV in South Africa has grown from less than one percent of the
population in 1990 to twenty-five percent of the population in 2000.3 This phenomenal
growth of HIV has far-reaching economic implications. As HIV and AIDS tremendously
affect the demographic segment of prime working age--between the ages 20 and 50--the
disease can tremendously decrease the labor force. As employers, rather than the
government, provide most of the heath and retirement benefits in South Africa, this
increase in disease among workers will increase business costs. Increased infection rates
will also increase sick leave and lower job performance. Given the non-discrimination
laws of South Africa, employers cannot discriminate against those with HIV/AIDS, and
thus will have a disincentive to invest in long-term skill development and human capital,
as such investments may not bring the wanted returns if the employee dies or takes sick
leave.
1 "Investing in South Africa" BBC News: Business (12 June, 2001)
http://news.bbc.co.uk/hi/english/business/newsid_1384000/1384684.stm
2 Ibid.
3 Rob Dorrington et al., "The Impact of HIV/AIDS on Adult Mortality in South Africa" (South Africa:
Medical Research Council: Burden of Disease Research Unit, 2001) 7.

The government of South Africa also does not seriously address the issue of
HIV/AIDS in the country. The president of South Africa, Thabo Mbeki, claims to doubt
the link between HIV and AIDS, saying that reasons such as accidents are the cause of
substantially increased death rates among the prime working population of people 20-50
years old. Although South Africa has one of the highest numbers of HIV infections in the
world, the government seems disinclined to acknowledge the threat of AIDS, which
results from HIV, much less to engage in active programs to stem the rise of HIV
infection rates. This very denial and inaction may actually contribute to the high HIV
infection rates, as in other countries, such as Uganda, which has publicly discussed and
fought the problem, HIV infection rates have slowed dramatically.
The rise of HIV and AIDS in Africa and the threat of decreased economic wellbeing raises the compelling problem of how foreign investors will respond. Do foreign
investors see the increasing infection rates of HIV in South Africa as a disincentive?
Perhaps they are not yet aware of the economic impact that the high infection rates will
have? What is the relation between HIV/AIDS and foreign investment in South Africa? In
response, one can hypothesize that foreign investment in the country would decrease.
Investors would more likely seem wary of investing in a country where worker
productivity is expected to decrease, employee health costs are expected to increase, and
the return on human capital investment is expected to decrease, given the high mortality
rates that should follow such a high prevalence of HIV infections in the country.
In investigating this hypothesis that increasing HIV infection and mortality rates
decrease foreign investment, this paper finds inconclusive evidence to justify such a
hypothesis. HIV infection rates and estimated deaths have risen dramatically in the

1990s, but so have foreign investment rates. In fact, some multinational companies have
actually invested more money in South Africa for HIV/AIDS prevention and treatment
for their employees, thus suggesting that they seek to actively combat the harmful and
costly effects of HIV and AIDS on their workforce. Furthermore, many other factors,
such as global economic conditions and investment climate, affect the decisions of
investors. Thus the correlation between HIV/AIDS in and foreign investment in South
Africa cannot be treated as ceteris paribus. This paper argues that although there may not
yet be an apparent correlation between HIV/AIDS infection rates and foreign investment
because investors are either not aware of the problem or because expected returns
outweigh expected costs, that the attractiveness of South Africa as an investment market
will decrease in the future, especially if the government continues to ignore the problem.
To argue the thesis, this paper will first outline the historical and current rates of HIV and
AIDS in South Africa, then will look at the economic impact of the disease. The paper
will next look at foreign investment to see if a correlation does exist. Given the apparent
lack of correlation between HIV/AIDS and foreign investment, this paper will then offer
possible reasons for such, but conclude by highlighting the future impact and possible
influence of the disease on the South African economy and foreign investment therein.

HIV and AIDS in South Africa

The rates of HIV infection in South Africa have increased dramatically over the
last decade. From infecting only one percent of the population in 1990, the number of
HIV/AIDS cases grew to an estimated thirteen percent of the adult population in 19974 to

4 South Africa, UNAIDS/WHO Epidemiological Fact Sheet on HIV/AIDS and Sexually Transmitted
Diseases. (1998) 3.

twenty-five percent of the population in 2000.5 According to the CIA World Factbook, the
estimated number of people with AIDS in South Africa in 1999 was over four million.6
This growth mirrors the widespread prevalence of the disease in Africa. Although Africa
accounts for only ten percent of the word population, it accounts for over seventy percent
of all HIV/AIDS cases.7
Although some people, such as Thabo Mbeki, question the validity of such
figures, the agencies providing these shocking numbers on HIV and AIDS cases in South
Africa argue for the validity of their estimates. While these are only estimates and not
exact counts, the methods used to produce the HIV/AIDS infection estimates use a
methodology that has thus far proved accurate in producing estimates which give a good
indication of the magnitude of the epidemic in individual countries according to the
UNAIDS/WHO fact sheet on HIV and AIDS in South Africa. Furthermore, the Medical
Research Council of South Africa bases many of its estimates on HIV infection found in
blood samples taken from pregnant women who attend the public sector for antenatal
care. As eighty percent of pregnant women make use of public antenatal care, and as
these women have recently had unprotected sex, they form a good basis by which to
develop estimates of HIV/AIDS infection rates in the larger population.8
Although some people may not believe the HIV/AIDS infection rates because
they are only based on estimates, the changing mortality patterns in South Africa provide
strong evidence for the growing rates of HIV/AIDS in the country and the deadly effects
5 Rob Dorrington et al., "The Impact of HIV/AIDS on Adult Mortality in South Africa" (South Africa:
Medical Research Council: Burden of Disease Research Unit, 2001) 7.
6 South Africa CIA World Factbook 2001. (2001)
http://www.cia.gov/cia/publications/factbook/index.html
7 Akukwe, Chinua, Combating HIV/AIDS in Africa (2000) http://www.afbis.com/hivaids.htm
8 Rob Dorrington et al., "The Impact of HIV/AIDS on Adult Mortality in South Africa" (South Africa:
Medical Research Council: Burden of Disease Research Unit, 2001) 7.

thereof. In previous years, the majority of adult deaths were found to occur in the later
years, mainly after the age of fifty. Yet throughout the 1990s and into the early part of the
Twenty-first Century, the mortality rates of adults below fifty years of age has increased
sharply. The ratios of deaths of men and women between the age of fifteen and forty-nine
over those older than fifty clearly shows this trend:
Table 1: Ratio of deaths aged 15-49 to deaths aged 50+ for reported deaths by year of
occurrence and sex.9
Y

The data in Table 1 takes on even greater meaning when understood in conjunction with
the growing aggregate mortality rates. Mortality rates are not just moving from older to
younger adults, but the total number of deaths is increasing faster than the population. In
1989 the estimated total number of adult deaths was 237,000, while in 1999/2000 it was
412,000. This is an increase of seventy-three percent, while the population of South
Africa has grown only thirty-seven percent over the same time frame.10 Thus the increase
in the mortality is twice that of the increase in population. When the deaths by gender and
age are placed upon a graph showing the number of deaths per age bracket, the curves for
males and females both show high mortality levels for children under five. The mortality
graph for males then shows a large bulge with the highest mortality rates for men aged
thirty to forty, but remaining high through age seventy-five (see Appendix). The female
9 Ibid. 17.
10 Ibid. 18.

mortality graph shows a large number of deaths between ages twenty-five and thirty, with
another bulge between ages sixty and eighty. These graphs from the deaths in the
1999/2000 reflect the tendency of men of many ages to have sex with younger women, as
shown by the more level male mortality versus the two spikes of younger and older
female adults.11 These increases of mortality of younger adults strongly support the
argument that HIV/AIDS has a significant impact in South Africa. Although some may
contend that these mortality statistics reflect causes other than HIV/AIDS, the correlation
between the large increase in the estimated number of people with HIV/AIDS in South
Africa and the recent surge in younger adult deaths seems to strongly indicate that
HIV/AIDS is a real and significant problem for the country of South Africa.

Influence of HIV/AIDS on the South African Economy

Although concrete data on the economic impact of HIV/AIDS in South Africa is
still rather scarce, the disease threatens to deeply harm the nations economy. Increasing
business costs are a significant result of the high percentage of HIV/AIDS infected
workers in South Africa. Retirement, death, and disability costs increase dramatically for
businesses that offer such coverage, such as the businesses in the manufacturing and
mining sectors. In these sectors and others, such as agriculture, indirect costs also rise, as
sick leave increases and on-the-job performance decreases.12 In a study by the Bookings
Institute, projections of HIV/AIDS cases through 2010 suggest that the extra cost of the
disease to companies ranges from 3 to 11 percent of annual salaries in 1999 to 2 to 8

11 Ibid. 16.Research Highlights: Heath Systems and Policy Annual Report: 2001-2001 Medical Research
Council of South Africa 1.
12 The Economic Impact of HIV/AIDS in Southern Africa Brookings Conference Report No. 9
(Washington DC: The Bookings Institution, September 2001) 4-5.

percent in 2010.13 Although this data is also only an estimate, it suggests that the
increasing costs of HIV/AIDS to companies in South Africa are material and significant.
The increasing mortality rate among working adults is another contributor to
raising business costs. In South Africa, companies generally pay the costs of the funerals
for employees. With the rising number of funerals, these costs rise, as do the indirect
costs of lost labor time both of the deceased employee and the living employees who
must attend the funeral. The cost of recruiting and hiring new employees also rises, as
businesses have to engage in new employee searches more often.14
In response to rising HIV/AIDS-related costs, some businesses may seek to move
heath care, death, and disability costs to the public sector. Yet the public sector will still
have to find the revenue to cover HIV/AIDS expenses, so may raise taxes on businesses,
thus costs to businesses will increase either way.
Another affect of HIV/AIDS on the economy is that of providing a disincentive
for investment in human capital. Given the sharply increasing mortality rates, as
discussed in the previous section, and given that these mortality rates are most obvious in
the working population, companies will loose many employees in AIDS-related deaths.
The lack of assurance that employers will be able to recoup investments in training and
human capital when they do not know if the employee will live long enough to use the
training and skills raises the opportunity cost of training and is thus a disincentive for
providing long-term training for employees.
Beyond just increasing business costs and providing disincentives for investment
in human capital, the HIV/AIDS crisis in South Africa may lead to an economic
13 Ibid.
14 Sydnes, Anne Kristin, Minister of International Development. Development, HIV/AIDS and the
Workplace (Norway: Ministry of Foreign Affairs) 2001. http://odin.dep.no/odinarkiv/norsk...091-09090023/index-dok000-b-n-a.html

contraction. When skilled workers die and companies have either higher costs or less
incentive to invest in training, productivity decreases. With decreased productivity,
income will decrease. Furthermore, when the workers in a household die, the ratio of
dependents--the very old and young--to the providers of a household increases. The
higher dependency ratio decreases the ability of households to save, thus also decreasing
investment.15 With decreased savings and investment, the economy will not be able to
grow. Furthermore, a decrease in the labor force by a fourth or a third in the next ten
years, as the current HIV-infection rates suggest, will exacerbate the decrease in
productivity, income, savings, and investment to sharply reduce the size of the South
African economy. The Brookings Institute likens this contraction of the economy to
running Adam Smith in reverse as income declines and gains from skilled
specialization are lost.16 The increase of HIV/AIDS in South Africa thus gravely threatens
to hurt the economy by reversing economic growth and causing an economic contraction.

Foreign Investment in South Africa

With such dismal prospects of economic growth and rising business costs, one
would expect that the rise of HIV/AIDS in South Africa to negatively affect its
international economic functioning, particularly foreign investment. Foreign direct
investment is conducted according to anticipated future profits.17 Rising costs, decreasing
productivity, and a shrinking economy would seem to reduce the amount of future profits
that a company could expect from investing in South Africa, thus decreasing the
15 Kirby, Alex, Africa Pays Hidden Cost of Aids BBC News: Sci/Tech. (20 July 2000)
http://news.bbc.co.uk/hi/english/sci/tech/newsid_843000/843209.stm
16 The Economic Impact of HIV/AIDS in Southern Africa Brookings Conference Report No. 9
(Washington DC: The Bookings Institution, September 2001) 3.
17 Carbaugh, Robert J, International Economics. (United States: South-Western Thomson Learning, 2002)
308.

willingness of companies to invest in the country.

A survey of foreign investment in South Africa over the last ten years, however,
does not seem to directly support this conclusion. Rather, the amount of investment
seems to have steadily grown for much of the last decade, excluding a downturn in 1998,
which followed the Asian financial crisis. Foreign direct investment in South Africa has
varied considerably since 1993, as shown in the table below.
Table 218
Year

1993

1994

1995

1996

1997

1998

1999

2000

Direct
Investment
(Millions of
Rand)

33

1 348

4 502

3 515

17 587

3 104

9 184

6 083

The data in Table 2 reflects a great deal of variance in the amounts invested in South
Africa. From very little investment before the end of apartheid, investment in South
Africa grew sharply through 1995, dropped slightly, and increased phenomenally from
1996 to 1997. With a slight recession and inflation in 1998, perhaps related to the Asian
financial crisis, the level of investment dropped to near-1996 levels. In 1999, investment
rose again, only to decrease by one-third in 2000. Although this progression of
investment is erratic, it seems to show an upward trend, albeit a very small one.
Such a trend would seem consistent with the perception that South Africa is a
resource-rich and, in comparison to other African countries, a politically more stable
country. Indeed, the total amount of foreign assets have increased steadily over the last
decade as well.

18 Information from: International Economic Relations Quarterly Bulletin (South African Reserve Bank,
December 2001) S-84.

10

Table 319
End of Year

1994

1995

1996

1997

1998

1999

2000

Total Direct
Investment
(Millions of
Rand)

44 701

54 764

61 976

81 463

91 862

318 630

328 859

The South African Reserve Bank (SARB) lists the Total Direct Investment in the
Foreign Liabilities of South Africa section. These numbers do not match up with those
of Table 2. The steady progression of these numbers would seem to indicate that they are
total sums of foreign investment, including those of previous years. They are also greater
than those in Table 2 because they include the value of foreign-held equity, reinvested
earnings, and real estate in South Africa. The data from Table 3 indicates that total
holdings of foreigners in South Africa are consistently growing, suggesting that investors
have chosen not to liquidate and withdraw their investments, despite the economic threat
of HIV/AIDS. The data from Tables 2 and 3, although apparently inconsistent, are
sufficient in showing that foreign investment in South Africa has grown over the past
decade.

Correlation of HIV/AIDS and Foreign Investment Data

The trends shown in HIV/AIDS infection rates and those of foreign direct
investment in South Africa do not correlate in the manner predicted in the hypothesis.
The foreign direct investment data in Table 2 shows a very erratic, if a somewhat positive
trend of increasing foreign investment in South Africa. Table 3 shows an increase in total
19 Ibid. S-92.

11

foreign investment in South Africa, which correlates in exactly the opposite manner as
predicted in the hypothesis. Rather than demonstrating an inverse relationship,
HIV/AIDS infection rates and total foreign investment in South Africa demonstrate a
correlation of both rising during the last decade.
From this interesting correlation of HIV/AIDS infection rates and total foreign
investment in South Africa arises the question of possible reasons for increased
investment despite increasing costs and a dismal economic outlook. Two main reasons for
these data arise--either the investors are ignorant or ignoring the problem of HIV/AIDS,
or they expect to recover a return on their investment despite the problem of HIV/AIDS.
The first reason is that investors may not be aware of the gravity surrounding the
HIV/AIDS crisis. This may somewhat reflect the attitude of President Thabo Mbeki who
denies the correlation between HIV and AIDS. Because per capita GDP is still growing
after the 1998 crisis20 and because investors also appreciate South Africas investorfriendly prudent macroeconomic management that has resulted in falling inflation and
small budget deficits,21 investors may see South Africa as a very attractive place to
invest. With so many positive aspects of the South African economy on which to focus,
many investors may not be aware of the dangers of HIV/AIDS.
The second reason that investors continue to place their money in South Africa
may be that they do not think that HIV/AIDS will significantly harm the profitability of
their investments. This second reason may take two forms. First, investors may only keep
their investment in South Africa as long as the favorable economic growth continues. If
the South African economy begins to falter as AIDS expenses and deaths take their toll,

20 Ibid. S-149.
21 Investors Drive South Africas Success Story Euromoney (London, June 2001) 94.

12

such investors may withdraw their investment, which is commonly known among antiglobalization campaigners as capital flight. As soon as the investment ceases to be
profitable, the investors may leave South Africa. As the South African economy is still
growing and seemingly doing well, investors may be happy to earn returns on their
investments and keep their money in South Africa until the economy worsens, at which
point they will remove their investments.
A second reason why investors do not think that they will suffer excessively from
HIV/AIDS is shown by a growing group of companies who provide employees with
HIV/AIDS treatment and prevention services. Coca-Cola and DaimlerChrysler, two
multinational enterprises with significant investments in South Africa, have announced
extensive anti-AIDS programs for their employees.22 DaimlerChrysler, which estimates
that twenty percent of its 4,445 employees have HIV, plans to provide free anti-AIDS
drugs to all employees and their families as needed, which includes 23,000 people. This
plan, which also covers the medical costs and promotes HIV/AIDS prevention, will cost
$1.9 million per year after a start-up cost of $745 million.23 Ford likewise has an antiAIDS program in which it covers half the cost of anti-AIDS drugs for employees. The
mining company Anglo American has also announced plans to provide its South African
employees with subsidized or free antiretroviral drugs.24 These programs by major
international companies in South Africa suggest that they see further investment in the
health of their employees as profitable. Rather than withdrawing from South Africa
because of high AIDS-related mortality rates, these multinationals seem to indicate
through their anti-AIDS programs that they believe that fighting HIV/AIDS and retaining
22 Science and Technology: United against AIDS? The Economist (London, June 30, 2001) 73-4.
23 DaimlerChrysler Provides Free AIDS Drugs to South African Employees The Associated Press State
and Local Wire: Business News; International News. (June 20, 2001).
24 Ibid.

13

workers is cost-effective.
This conclusion seems to be valid, given the experience of other companies
fighting AIDS. In Brazil, Volkswagen decided in 1996 to implement a major anti-AIDS
program for its 30,000 workers in response to rising HIV/AIDS related costs.
Volkswagen had good results within three years, with hospitalization fees down and
HIV/AIDS related costs down by forty percent.25
The experience of other countries in fighting AIDS also gives hope for South
Africa. Uganda, which discussed AIDS openly soon after being faced with the disease,
has managed to turn the tide--although the challenges are still enormous.26 The
discussion and preventative measures instituted by the government helped Uganda to
counter the rise of AIDS. The case of Uganda thus demonstrates that governments can
take effective measures to combat AIDS.
In light of the above two examples of companies and countries effectively
slowing the growth of the AIDS epidemic, the effort of foreign companies in South
Africa to treat and prevent HIV/AIDS among their employees carries the promise of
success. Thus those investors who, rather than withdrawing from South Africa, actually
increase investment in South Africa and work for the health of their employees do not
seem completely irrational for investing in South Africa despite growing HIV/AIDS costs
and death rates.
The efforts of multinational companies in combating HIV/AIDS in their own
workers cannot solve the problem of the disease in South Africa, however. The
government of South Africa, led by Thabo Mbeki, who rejects HIV as the cause of AIDS,
25Sydnes, Anne Kristin, Minister of International Development. Development, HIV/AIDS and the
Workplace (Norway: Ministry of Foreign Affairs, 2001) http://odin.dep.no/odinarkiv/norsk...091-09090023/index-dok000-b-n-a.html
26 Ibid.

14

has not actively engaged the problem of AIDS. Thabo Mbeki refused to attend the UN
conference on AIDS in New York from June 2001, even though he, the leader of one of
the countries most afflicted by AIDS, was in the United States at the same time.27 His
attitude towards AIDS seems one of denial, thus reducing the possibility for effective
governmental action against the disease. The employees of the multinationals in South
Africa number only in the thousands, while the numbers of HIV/AIDS cases number in
the millions. Without governmental programs to teach HIV/AIDS prevention to the
masses of South Africans and to attempt certain forms of treatment, the efforts of a few
multinationals will be minor.
The reasons for investors to hope for economic success in South Africa are also
limited by the ability of smaller companies, both domestic and foreign, to treat
HIV/AIDS in the manner of the larger multinationals. Smaller investors and many
domestic employers will be hurt by the rising costs of HIV/AIDS and the growing death
rates, but will not have the financial resources to administer costly anti-AIDS treatment
programs for their employees.
The unwillingness of the government to effectively counter HIV/AIDS in South
Africa and the inability of smaller employers in doing so present a future investment
market much less attractive than that which current investors in South Africa seem to see.
With infection rates of HIV at about twenty-five percent of the population, there seems
little that will keep the South African economy from shrinking in the coming years. As
argued above, the rising costs, decreased productivity, increased dependency ratios,
decreased savings, and decreased investment will lead to a reversal of Adam Smiths
theory of economic growth. Foreign investors will face greatly reduced profitability in
27 Science and Technology: United against AIDS? The Economist (London, June 30, 2001) 73-4.

15

face of the higher costs and shrunken economy. Thus although foreign investors in South
Africa seem quite positive at the moment, and although there does seem to be some hope
for the results of corporate and governmental anti-AIDS programs, the current inaction
by the South African government and the very magnitude of current HIV/AIDS infection
rates seems to offer only a dark picture for the future of the South African economy. Thus
foreign investment may yet decrease in the future as a result of the worsening HIV/AIDS
situation in South Africa.

Conclusion
The effects of HIV/AIDS in South Africa will certainly affect foreign investment
in the country. South Africa faces a tremendously dark future with the almost certain
probability that in the next ten years the estimated 4.7 million HIV-positive South
Africans will die from AIDS. The repercussions of the last decade's startling growth in
HIV/AIDS include higher business costs and a shrinking economy. The higher business
costs will most likely reduce profits for investors and the shrinking economy will reduce
the business prospects of foreign investors in South Africa. Given these dismal
predictions of the South African economy, one would assume that foreign investment
would have decreased in proportion to the increase in HIV/AIDS in the country. Yet the
last decade of data on foreign direct investment in South Africa does not support this
hypothesis. Rather, foreign investment in South Africa has risen steadily, if erratically,
over the last few years despite the growing prevalence of HIV/AIDS. This can be
attributed to either investor ignorance or confidence in their ability to make a desirable
return on investments, despite the HIV/AIDS crisis. The innovations of large

16

multinational investors in South Africa show promise in reducing their HIV/AIDS costs
through treatment and prevention. Yet given the limited scope of such programs and the
South African governments' unwillingness to seriously engage the problem of HIV/AIDS
in the country, coupled with the inability of smaller investors and employers in providing
comprehensive anti-AIDS programs, the future of the South African economy looks quite
dim. Thus, although foreign investments patterns in South Africa have not yet shown
much response to the HIV/AIDS epidemic, the dark future of the South African economy
will most likely cause investors to limit the amount of money going into the economy
that operates in the reverse progression of Adam Smith's ideal.

17

Appendix 1
Graphs from Dorrington, Rob et al., "The Impact of HIV/AIDS on Adult Mortality in
South Africa: Technical Report" (Medical Research Council: Burden of Disease Research
Unit, 2001)

18

19

Bibliography

Akukwe, Chinua, Combating HIV/AIDS in Africa (2000)

http://www.afbis.com/hivaids.htm
DaimlerChrysler Provides Free AIDS Drugs to South African Employees The
Associated Press State and Local Wire: Business News; International News. (June
20, 2001).
Carbaugh, Robert J, International Economics. (United States: South-Western Thomson
Learning, 2002) 308.
International Economic Relations Quarterly Bulletin (South African Reserve Bank,
December 2001) S-84.
"Investing in South Africa" BBC News: Business (12 June, 2001)
http://news.bbc.co.uk/hi/english/business/newsid_1384000/1384684.stm
Kirby, Alex, Africa Pays Hidden Cost of Aids BBC News: Sci/Tech. (20 July 2000)
http://news.bbc.co.uk/hi/english/sci/tech/newsid_843000/843209.stm
Research Highlights: Heath Systems and Policy Annual Report: 2001-2001 Medical
Research Council of South Africa 1.
Rob Dorrington et al., "The Impact of HIV/AIDS on Adult Mortality in South Africa"
(South Africa: Medical Research Council: Burden of Disease Research Unit,
2001) 7.
Science and Technology: United against AIDS? The Economist (London, June 30,
2001) 73-4.
South Africa CIA World Factbook 2001. (2001)
http://www.cia.gov/cia/publications/factbook/index.html

20

South Africa, UNAIDS/WHO Epidemiological Fact Sheet on HIV/AIDS and Sexually

Transmitted Diseases. (1998) 3.
Sydnes, Anne Kristin, Minister of International Development. Development, HIV/AIDS
and the Workplace (Norway: Ministry of Foreign Affairs) 2001.
http://odin.dep.no/odinarkiv/norsk...091-09-090023/index-dok000-b-n-a.html
The Economic Impact of HIV/AIDS in Southern Africa Brookings Conference Report
No. 9 (Washington DC: The Bookings Institution, September 2001) 4-5.

21

Outline Used for Planning

Scholarly suggestions
Increase costs The rising incidence of HIV/AIDS in the workforce increases business
costs and can lead to economic contraction.
Disincentive for investment
Adam Smith in reverse-decreased production, greater dependency ratio decreases S and I,
decreased consumption, government spending on Aids, not econ incentives, Adam Smith
in reverse.
Foreign Investment in South Africa
Hypothesis--bring in some of textbook.
Data,
Trends
Conclusion
Hypothesis not fulfilled--no correlation
Possible reasons
Lack of knowledge on Aids.
Still profitable to invest and treat and prevent AIDS--Coke and DC
Threat of future
Call for government action/response
Summary
Re-iterate point of paper and thesis.