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A central policy issue in the battle against HIV in Sub-Saharan Africa (SSA) is whether and when high-prevalence countries might become fully autonomous in designing and implementing their own intervention policies aimed to control the disease. The aim of this research is twofold. First, it develops a framework for explaining economic development in a general equilibrium growth model with endogenous fertility and endogenous mortality forced by the threat of a deadly enduring infectious disease, such as HIV/AIDS in SSA. Second, it aims to shed light on the interplay between foreign aid and endogenous domestic public policies in those SSA countries severely a icted by HIV. It investigates the demographic and macro-economic implications of an intervention policy where the overall amount of resources devoted to HIV/AIDS is the sum of an exogenous component representing foreign aid and an endogenous public expenditure. On the assumption that these policies allow the same degree of HIV control, we show quite di¤erent responses in terms of key demo-economic variables. These e¤ects mainly pass through the fertility response to the evolving epidemic conditions.
