AIDS Epidemic and Economic Growth: Testing for Causality

This article investigates the relationship between AIDS and economic growth for 17 African countries for the period 1990 to 1996. Previous studies have found mixed results, which may have been due to the adoption of inappropriate models (simulation and cross-country models). The pitfalls of such models can lead to spurious results. Our results, which are based on pooled time series, show a significantly negative relationship between AIDS and growth. This article’s unique contribution, however, is the use of the Granger-causality test procedure to examine the link between AIDS and growth in Africa. No previous study can be found that has conducted such examination. The results support the existence of bi-directional causal relationship between AIDS and growth in Africa for the period studied.