As discussed in Chapter 1, the aids pandemic is both a cause and effect of poverty. Poverty, in turn, is a function of low levels of economic development and high inequality. The relationship between aids, economic growth and income distribution is thus central to the development dilemma posed by aids. This chapter reviews the existing macroeconomic modelling work on the impact of aids on economic growth in South Africa and poses the question of the likely impact of aids on inequality.

Figure 1.4 in Chapter 1 outlined some of the ways in which the aids pandemic reduces economic growth – thus increasing poverty (and exacerbating the risks of hiv infection). Chapters 3 and 4 opened the discussion of the economic cost of aids by exploring the costs and benefits of various aids interventions (including treatment) in South Africa. With regard to mtctp, it was argued that the government would save money by acting to save children from hiv infection. Providing haart to adults, by contrast, would save lives, but the costs in terms of the government budget are likely to be substantial.

What has been missing from the discussion so far, however, has been any explicit consideration of the inter-relationship between poverty, aids and economic growth. Despite highlighting this issue in the opening chapter, the demographic modelling work used in Chapters 3 and 4 (the assa2000 Interventions Model) took no cognisance of the impact of the growth path on the pandemic, or of the impact of the pandemic on economic growth.