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HIV/AIDS, Labour Productivity and Trade Competitiveness: Evidence from Kenya



Research Institutions:

Maastricht Graduate School of Governance (MGSG) and University of Nairobi (UON), Kenya Institute for Public Policy Research and Analysis (KIPPRA).



In 2002, it was estimated that globally, 40 million people were infected with HIV/
AIDS and more than 70% of this disease burden was borne in sub-Saharan Africa where HIV/AIDS is now the number one overall cause of death (Guinness et al. 2003). Besides the human cost, HIV/AIDS is having profound effects on productive employment and economic development in Africa, and hence its ability to cope with the pandemic (Bloom et al. 2006). The spread of HIV/AIDS is being aided by stigma and discrimination which keep the disease underground and discourage persons from being tested and seeking treatment. The total number of people tested for HIV globally remains unacceptably low with an estimated 90% of people who are HIV-infected worldwide unaware of their status (Waxman et al. 2007)

Despite the magnitude of the problem , little rigorous empirical research on the micro level effects of HIV/AIDS at the firm and industry levels has been published in the literature on African development. Unpublished case studies from Kenya and Botswana in 1994 found widely varying impacts, with costs ranging from less than 1% of profits to nearly 9% (Rosen et al. 2004)

Further, studies concerning the impact of AIDS on profitability in Africa have had mixed results. Studies completed in South Africa (Morris et al. 2000) and Kenya (Roberts et al 1996) suggest that the economic impact of HIV/AIDS on profitability was likely to be substantial. On the contrary, studies in Zambia (Smith and Whiteside 1995), Malawi (Jones 1996) and Botswana (Greener 1997) indicate that the impact of HIV/AIDS on profitability was not substantial.

These studies also faced a number of conceptual and empirical difficulties, ranging from unknown HIV prevalence to incomplete definitions of costs. Inconsistent methodologies and scarcity of data make their conclusions difficult to interpret or compare.

 All of the above mentioned studies have analysed data where information on HIV status is known to either the researcher or the responded or both. While such information has provided important background for such studies, It is particularly important to explore labour productivity and HIV/AIDS in contexts where sero-status is not known to the researcher and is unlikely to be known to the respondent. This is a typical situation in sub-Saharan Africa  (Fox et al. 2004; Waxman et al. 2007). In these contexts, although they may not know this with certainity, most individuals are HIV-negative and thus remain exposed to the risk of contracting the virus, therefore potentially experiencing some degree of worry associated with this health risk.

While acknowledging the importance of effects of other confounding factors on a firm’s performance, this study mainly focuses on effects of worker-concerns about HIV/AIDs and how these concerns affect productivity of firms, and thus their competitiveness in domestic and foreign markets.  Workers’ concern about health risks associated with HIV/AIDS is a real phenomenon that affects a large proportion of employees in manufacturing sectors in Africa. Thus, despite the subjective nature of this health variable, there is need to investigate whether it affects labour productivity and subsequently trade competitiveness of firms.

This research project aims to accomplish four objectives. The first, is to examine if and how a firm worker’s productivity changes as a consequence of the concern of employees about health risks associated with HIV/AIDS (analyse the determinants effects of employee concerns about HIV/AIDS, i.e., to understand why some employees worry about HIV risks while others do not). The second objective of the study is to measure effects of employee concerns about the health risks associated with HIV/AIDS on labor  as well as on total factor productivity. The third objective is to evaluate the impact of factor productivity on competitiveness of firms in domestic and foreign markets, controlling for other determinants of trade competitiveness, such as location and age of firms. Finally, the study will examine whether firms’ responses to HIV concerns of workers, for example, through interventions that reduce risks of contracting HIV/AIDS or activities that support or treat infected workers affect performance of firms.

This study will use existing firm level data,  supplemented by primary qualitative data collected from interviews with selected manufacturing firms. The results of this study will be useful in informing government and firm policies on HIV/AIDS. Collaboration with MGSG and KIPPRA would be helpful in improving the content of the research and also in translating outcomes into policy which will not only be relevant in the Kenyan context but also applicable to other develoing countries especially in sub-Saharan Africa.


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