Economics of HIV Prevention: Understanding the Empirical Intersection between Commodity Price Shocks, Health Spending and HIV Infections in Developing Countries

Abstract

Background: This study seeks to understand the empirical nature of macro-financial factors associated with the worsening of HIV infections and the risks that need to be carefully monitored for a sustainable improvement in HIV outcomes as developing countries seek to achieve the United Nations 95-95-95 targets. Methods: The author used a panel VAR model to study the long-term endogenous relationships between percentage changes in the annual spot price of the most traded commodities, GDP per capita, health spending, and the HIV infection rate of developing countries. Results: The author discovered that shocks of global commodity prices negatively impact GDP per capita, real government health spending, and real private health spending. These shocks have adverse spillover effects characterized by worsening HIV infections. The reactions from price shocks suggest that GDP per capita contract immediately when a commodity price shock hits developing economies. Real government health spending and real private health spending also contract instantly. HIV infections begin worsening three years after the shock in the energy and precious metal blocks of countries. HIV infections also begin to worsen two years after shocks in the agricultural block of counties. These impacts are statistically significant and can potentially reverse the positive HIV infection gains achieved in the previous years. Emergency funds, insurance schemes, and international aid for HIV need to discharge more funds to counter these shocks. Conclusions: There is a significant risk of reversing HIV infection outcomes arising from commodity price shocks. Funding agencies must protect HIV prevention services from global macro-economic shocks as countries move closer to the United Nations 95-95-95 targets.