EVENTS

Date:	Monday, November 25, 2002
Time:	9:15 AM -- 11:00 AM
Location:	Wohlstetter Conference Center, Twelfth Floor, AEI 1150 Seventeenth Street, N.W., Washington, D.C. 20036

November 2002
Can Asia Avoid the AIDS Typhoon?

The United Nations estimates that in the last two decades about 65 million people have contracted the HIV/AIDS disease and that about 25 million of them have already died. This relatively new but rapidly spreading disease has so far been concentrated in sub-Saharan Africa where an estimated 70 percent of the world's 40 million active AIDS carriers are located. But what about the future? Will the African experience repeat itself in other parts of the globe?

On November 25, AEI hosted a health policy discussion featuring AEI resident scholar Nicholas Eberstadt reporting on his recent study about the threat of HIV/AIDS in Eurasia. The session began with a presentation of the study, followed by commentary from two AIDS experts.

Nicholas Eberstadt
AEI

In recent years, HIV has emerged as a major public health problem. The epidemic is already a catastrophe in sub-Saharan Africa where as many as 30 million people may already be infected and perhaps 20 million have died. HIV/AIDS is the leading cause of death in a number of African countries and has resulted in negative growth in several nations.

Today, the gravitational center of the pandemic may be moving from sub-Saharan Africa to the Eurasian region. Eurasia (the territory encompassing the continent of Asia plus Russia) is currently at the level of the sub-Saharan region of a decade ago. If the momentum continues, however, the pandemic would be not just the humanitarian tragedy of sub-Saharan Africa but could have direct impact on economic affairs and the balance of power between states.

The Current Epidemic. The methodologies that generate HIV estimates in the low-income world are not pretty. Most countries do not have reliable data on mortality and only eight percent of the population of less developed countries live in a nation with near complete vital registration. None of the countries of the sub-Sahara have reliable registration of mortality. In addition, national estimates are based on sentinel surveillance and are often generated from surveys of only a few thousand people. Thus, the estimates involve a high level of uncertainty, though the available data are consistent with a catastrophe driven by HIV.

There are success stories among the tragedies. In Thailand, for example, a vigorous governmental prevention program has led to a drastic decrease in prevalence among Thai military conscripts since 1993. Because of the nature of the HIV/AIDS disease, however, even after the commencement of aggressive government programs the number of carriers doubled over the following decade.

To date, projections about HIV have not been terribly accurate. The most pessimistic projections of fifteen years ago look optimistic today. United Nations estimates in 1994 projected a life expectancy of over seventy years in Botswana in 2015 but current Census Bureau projections have revised that number to just thirty years.

A number of factors are responsible for this explosive transmission in sub-Saharan Africa. Ecological factors including malnutrition, heavy burden of disease, and high prevalence of curable sexually transmitted diseases weaken the population and make it more susceptible to the spread of HIV. In addition, behavioral factors such as female circumcision and anal intercourse also increase the likelihood of transmission.

In Eurasia, the potential for explosive transmission is not as obvious as in sub-Saharan Africa. India, China, and Russia enjoy better nutrition and higher levels of health than the African nations but they are still not at ideal levels and the countries have several unique factors that expose broad segments of their populations to HIV risk. Various sources estimate that Russia may have one to two million carriers and that over one percent of the adult population is infected. In addition to transmission via homosexual intercourse and IV drug use, the Russian prison system acts as a carburetor to spread HIV throughout the population. India currently has between four and eight million HIV sufferers with transmission via IV drug use, commercial sex, and along major truck routes. The Chinese situation is most uncertain because most HIV cases are undocumented and untreated. Although only 30,000 HIV cases are registered, U.S. sources estimate one to two million carriers while some NGOs suggest that there could be as many as six million cases today. HIV in China is transmitted via commercial sex, IV drug use, and tainted blood. The risk is even more dramatic because of a large floating population and a gender imbalance that leaves an excess of males with no realistic prospect of finding a bride.

Projections. There is no reliable method for accurately forecasting the long-term trajectory of the HIV/AIDS pandemic but statistical techniques can predict future epidemic scenarios using current data. A model using SPECTRUM software and based on three "families" of scenarios for the disease, corresponding to high, medium, and low levels of HIV infection demonstrates the staggering implications of this disease in Eurasia. ("Severe" is taken here to mean adult HIV prevalence by 2025 reaching as high as 10 percent in Russia, 7 percent in India, and 5 percent in China; "intermediate," 6 percent, 5 percent, and 3.5 percent, respectively; and "mild," 2 percent, 1.5 percent, and 1.5 percent.) The model used Census Bureau data as the baseline and assumed for each country that the AIDS epidemic began in 1985, had an incubation period of nine years, a two year life expectancy after onset, and a standard heterosexual distribution structure.

The results of these projections are astounding. Even under the assumptions of a mild epidemic, the cumulative total of new HIV cases in China, India, and Russia from 2000 to 2025 would be about 66 million, compared to UNAIDS estimates of about 65 million infected worldwide to date. The other scenarios predict even higher HIV totals: an intermediate epidemic would suggest nearly 200 million new HIV cases in the next twenty-five years, and a severe epidemic would lead to more than 250 million new cases.

The epidemics would significantly alter population dynamics in these countries and substantially reduce the future size of certain economically important population cohorts. Under the milder epidemic, for instance, the aggregate populations of India, China, and Russia would be almost 90 million lower in 2025 than Census Bureau projections currently anticipate. Worse, the cohort often labeled the "economically active" population--persons fifteen to sixty-four years of age--would be about 44 million fewer than currently projected. The impact is correspondingly greater under the less optimistic scenarios. Russia is hit especially hard demographically because Russia's population is projected to decline over the coming quarter-century--even in the absence of any worsening of its HIV crisis. Under the conditions of even a mild epidemic, however, that decline is projected to accelerate dramatically.

Finally, all of the scenarios point to either stagnation or reduction in national health levels as reflected by life expectancy at birth. Under the severe epidemic scenario, Russian life expectancy would be a full decade lower a generation hence than it is today, and the projections for India and China are almost as grim.

An HIV/AIDS epidemic has important economic ramifications. By curtailing adult life spans, a widespread epidemic seriously alters the calculus of investment in higher education and technical skills--thereby undermining the local process of investment in human capital. In addition, widespread HIV prevalence could affect international decisions about direct investment, technology transfer, and personnel allocation in places perceived to be at a high health risk. These factors suggest that an HIV breakout could have lasting economic consequences--in effect, cutting afflicted countries off from globalization. The long-run economic impact of these effects could be even more significant than the constraints the epidemic could impose on local labor supplies or savings.

The prospective economic cost of HIV/AIDS for a society is difficult to calculate precisely but a simple health-based productivity model can provide a first approximation of the macroeconomic impact. Without HIV, Russia's GNP per "person of working ages" would be predicted to rise by about 50 percent between 2000 and 2025. Health-based productivity predictions, however, indicate that even with a mild epidemic, Russia's predicted output growth in output per working person would be less than half as great as under the "no HIV" scenario. In addition, because the HIV scenarios reduce the size of the fifteen to sixty-four cohort, the total GNP would remain completely stagnant between 2000 and 2025. If there were an intermediate epidemic, the predicted level of output per worker would actually be lower in 2025 than it was in 2000, and the GNP would be a shocking 40 percent lower in 2025 than it is today. HIV/AIDS in Russia might prevent the Russian economy from experiencing any growth in the years ahead.

For India, this method predicts about an 80 percent increase in GNP per working-age person over the next twenty-five years assuming the absence of AIDS. Total GNP would be almost 170 percent higher in 2025 than in 2000--with growth driven both by a larger work force and by increasing worker productivity. All of the HIV scenarios, however, would reduce that growth significantly. A milder epidemic, for example, would depress predicted output per worker by about two-fifths, and the total GNP would rise by a third less than the baseline over the quarter century. Under the intermediate epidemic scenario, output per working person would be no higher in 2025 than it is today, and total growth would be cut by three-fourths over the next twenty-five years.

China without AIDS would, by this method, experience a predicted increase in output per working-age person of more than 50 percent, and GNP would grow by a modest 80 percent during the next twenty-five years. Even a mild epidemic would cut the growth in output per worker by half and the growth in GNP by more than a third. The more pessimistic scenarios would suggest even more dramatic economic repercussions for the Chinese economy.

Possible Interventions. In order for a successful intervention to occur, governments must be committed but neither China, India, nor Russia have experienced an enthusiastic embrace of prevention. Thai success was due in a large part to NGOs, civil society, and trust in government. This will perhaps be most difficult in China where NGOs cannot act freely and there is little trust in the government.

Anti-retroviral therapies remain the most effective way to treat HIV and AIDS but the cost-benefit analysis of these interventions is harsh for poor population. At the Western cost of $15,000, a worker output of $80,000 is required to make the treatment worthwhile. Even if the drugs were free, the cost of dispensing and administering the treatments would reach about $800 per year, and many workers in India, China, and Russia do not earn even that much annually.

An outbreak of HIV/AIDS in Eurasia would be more than just a humanitarian tragedy. The pandemic there stands to affect, and alter, the economic potential--and by extension, the military power--of the region's major states. And the disease will do more damage to some big countries than to others. Over the decades ahead, HIV/AIDS is set to be a factor in the very balance of power within Eurasia--and thus in the relationship between Eurasian states and the rest of the world.

Keith Hansen
World Bank AIDS Campaign Team for Africa

This study raises two sets of questions: Are things really this bad and could it really pose a security risk? The answers to both of these questions are yes but these are the wrong questions.

In response to Nick Eberstadt's study, there may have been too much emphasis placed on nutrition as a factor in the spread of HIV. Certainly, it does have some effect but Botswana and Zimbabwe, countries with prevalence rates of over 30 percent, actually have better nutrition than many other sub-Saharan countries. Additional factors that were not mentioned include political instability and lack of male circumcision. As described in the study, the Russian prison system, tainted blood, and population migration are also important factors that may lead to a different kind of HIV migration.

While most cities in Africa had similar patterns of spreading HIV, the trends are not useful unless it is known when the epidemic started and where the epidemic is today. HIV and AIDS exhibit chaotic behavior and much depends on the initial conditions.

There is no question that AIDS presents an economic threat. While it is still early to understand the full dynamics of the threat, it is clear that the death of able-bodied adults in the prime of their life is horrible for any economy. This health-based productivity analysis based on life expectancies, however, is an oversimplification. Although life expectancy is an indicator of health, it is a composite outcome, and if one acute factor attacks the life expectancy, it does not necessarily mean that there will be major impact on the economy. Early in the Ugandan epidemic, for example, life expectancy was decreasing while the economy remained strong. For this reason, among others, the predictions in this study may be overly pessimistic. While this predicts a decrease in Russian GNP of 40 percent, World Bank models show a likely decrease of only 11 percent. Countries may suffer less shock because of an available reservoir of workers.

In terms of interventions, anti-retroviral therapies are becoming less expensive and on-again/off-again treatments are becoming possible, further reducing the annual cost. Unfortunately, in order to benefit from these therapies, an infrastructure must be in place for the delivery of the inexpensive drugs.

The answers to questions about the economy should be "Who cares?" The economy is really the welfare of everyone who is left. These macro measures are not a good indication of what really matters. Much of what AIDS affects is stability and the epidemic leads to a great deal of internal instability.

There are a number of additional questions that should be posed. How certain can we be of any of these numbers? Unfortunately, we cannot be very certain of any projections. What is the cost if we are wrong? The cost is catastrophic. So, if the predictions are uncertain and the cost is huge, what is the point? We need a dramatic increase in prevention, care, education, and outreach for high-risk groups. The health system must be strengthened. These are actions that are necessary no matter what the outcome may be.

Perhaps the most valuable result of Nick Eberstadt's study is that it has brought attention to these important issues. Now the appropriate question is: What part of catastrophe do you not understand?

Jane Hu
China Foundation

The China Foundation sponsors health centers in the poorest rural areas in China, where income is often less than one hundred dollars per year. Selling blood was a necessity in these areas and peaked around 1995. Now, orphans and the elderly are the only people left in most villages. Shanghai and Beijing are very prosperous cities, allowing no indication of the tragic conditions in the rural areas. Fortunately, the Chinese have a strong will and still manage to live with some joy. These villagers do not want expensive drugs--they just want food.

China is in danger because the government was in denial about the AIDS epidemic until recently. The government did not want to lose face and thought it was more important to continue to develop the country, as there were too many people regardless. They may have even seen the epidemic as a way to reduce the burden of the high population. It would be simple for the government to establish a health education program because they control all media. Unfortunately, they were unwilling to admit or even discuss the problem. When China was denied global funds because they refused to admit that there was an HIV problem, they finally agreed to acknowledge the issue, though they still refuse to take action.

Another difficulty with the Chinese AIDS crisis is a misallocation of resources. International organizations duplicate efforts in areas that are already overburdened with aid and often ignore rural areas where the epidemic is rising. The China Foundation has resources to reach large numbers of villagers through television programs and other information at health centers but is unable to secure funding for these important projects. China does not need huge amounts of money for luxuries such as drugs and research programs; the nation needs basic health education.

AEI research assistant Lisa Howie prepared this summary.