HIV/AIDS and international aid effectiveness

The last post presented some optimistic data suggesting that many of the world's poor are better off. An article in today's New York Times, however, paints a more disturbing picture when it comes to HIV/AIDS in Africa.

Beyond the immediate human tragedy of the illness, the article raises a number of very difficult questions about the role of international aid. Currently the world (mostly the U.S.) spends about $10 Billion on HIV/AIDS, whereas it would cost more than twice that to control the epidemic. Given the heartbreaking scenes described in the article, this seems like the right thing to do. But is it? It costs about $11,000 to save the life of an African with HIV, but...

"Donors have decided that is too much, that more lives can be saved by concentrating on child-killers like stillbirth, pneumonia, diarrhea, malaria, measles, and tetanus. Cures for those killers, like antibiotics, mosquito nets, rehydration salts, water filters, shots and deworming pills, cost $1 to $10."

So there are trade-offs; if the objective is to save the most lives for a given budget, how should the money be allocated?

The debate also touches on questions of aid effectiveness. In DV409 we found that there was no robust macro-econometric evidence that aid increases economic growth. However from the descriptions in the article of the millions of Africans benefiting from HIV antiretrovirals financed through international aid, this would seem to be a straightforward case of aid really making a big difference.

Or is it? What might have happened in the absence of that aid? Once the price of drugs had fallen, would the recipient African governments have stepped up to fund treatments for their own citizens themselves? To what extent is aid fungible and to what extent could aid flows be subsidizing other spending on not-so-laudable priorities? These are counterfactual situations that can only be speculated on, but the article hints at an underlying situation that is complex and difficult to control:

"United States Embassy officials debated adding $38 million, he said, but cabinet-level Ugandan ministers had been caught stealing from other donors and, though forced to repay the money, were not jailed. The government “hasn’t shown the leadership or commitment to transparency to earn additional funds,” the official added.

Also, he said, Uganda contributes too little. Oil was recently discovered near Lake Albert and the government promised to spend the royalties on roads and electricity, but did not mention AIDS.

“And now the paper says they’re buying Russian jets,” another official added with obvious disgust. Uganda is negotiating for a $300 million squadron of Sukhoi fighter-bombers. "

The article really paints a picture of the international aid community stuck between the proverbial rock and a hard place - What do you think?