HIV/AIDS, human capital, and economic growth prospects for Mozambique

This paper examines the implications of AIDS deaths for economic growth prospects for Mozambique. Human capital accumulation through education receives particular attention. Education and human capital transition matrices are estimated using a minimum cross entropy approach. Consistent with evidence from Tanzania and elsewhere, HIV/AIDS is assumed to slow the rate of human capital accumulation. Using a dynamic computable general equilibrium approach, reduced rates of human and physical capital accumulation are shown to interact strongly with technical change that is biased towards physical and human capital. The results point to the education sector as a major and policy sensitive channel of impact.