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Ms. Helene Poirson Ward
This study seeks to explain economic growth differences in an aggregate production function framework, where labor reallocation from agriculture to modern sectors influences labor efficiency growth. The econometric analysis uses a panel of 65 countries over 1960-90. The results highlight: (a) the differences in labor reallocation impact on growth, controlled for using the intersectoral wedge in labor productivities; (b) the significance of labor reallocation effects, even after controlling for capital accumulation, initial conditions, and country effects; (c) the role of slow labor reallocation in explaining the dummy variable for Sub-Saharan Africa; (d) the role of initial education levels in explaining differences in labor reallocation rates.
Ms. Helene Poirson Ward

Rates, 1960-90 Figures: 1. Labor Efficiency Index, 65 Countries, 1965-90 2. Relative Labor Productivity in Non-Agricultural Sectors, 65 Countries, 1965-90 Appendix References

Helene Poirson

schooling effort of workers in sector 2 or the share of that sector in the labor force, when employment there is rationed by an above equilibrium real wage. To normalize the labor efficiency index, average labor efficiency in the sample is set to 1, following Sarel (1995) , so that: 1 = β 1 + θ m 2 + θ ˜ m ˜ 2 , ( 6 ) denoting m 2 , m ˜ 2 the means of b 2 , b ˜ 2 for the sample. The expression for l becomes: l = 1 + θ d

Ms. Silvia Sgherri and Mr. Maitland MacFarlan

) ( 15 ) Substituting back into equations (3) and (4) and rearranging, we can derive the steady-state capital stock in the two sectors as functions of income allocation between sectors, labor force allocation between skill categories, health care costs and labor efficiency indexes. These variables are assumed to remain unchanged throughout the simulation period (implicitly we are here assuming that AIDS does not generate any redistribution effect apart from the one on age/experience structure of the labor force.). k

Ms. Silvia Sgherri and Mr. Maitland MacFarlan
This paper provides an overview of the potential macroeconomic effects of HIV/AIDS in Botswana, focusing on the key channels through which the pandemic is likely to affect the economic outlook and on the uncertainties involved. To estimate the impact of HIV/AIDS, a dual-economy equilibrium model is constructed and simulated under different scenarios. Depending on exactly how AIDS affects the outlook, GDP growth is projected to fall from around 5½ percent a year without the pandemic to between 1½ and 2½ percent a year with AIDS. Non-negligible redistribution effects across sectors and labor skill categories are also likely to arise. Finally, the paper draws attention to the potential effects of HIV/AIDS on the long-term fiscal position of Botswana, highlighting the need for increased international support and/or lower drug prices so that the widespread introduction of anti-retroviral drug treatments is feasible.