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AIDS Poses Grave Threat to Cambodian Economy

AIDS Poses Grave Threat to Cambodian Economy

AIDS is a medical problem. But it is more than that. It is primarily a huge social

problem-with moral, legal and economic implications. All social problems present

questions of economic choice regarding resource allocation; it is thus legitimate

to address the Cambodian AIDS issue from a non-medical point of view.

AIDS is a two-edged sword. It causes substantial direct treatment costs. And it increases

what economists call "opportunity costs," due to the discounted loss of

labor earnings and productivity. (See box page 18).

In a worse case scenario, four things may begin to happen in Cambodia by the turn

of the century:

  • there could be the onset of a gradual decline in the adult population eventually

    paralleling the loss of productive life during the Khmer Rouge days;

  • existing male/female imbalances, already unnatural which could further be distorted

    by the death of many young males;

  • the government would have to find a minimum of U.S. $4 million per year to fight

    AIDS (a lot when Cambodia's total health budget-mainly for salaries-is currently

    around U.S. $19 million);

  • the overall AIDS cost for the forthcoming decade might have a cumulative deflationary

    impact of some U.S. $221 million on economic growth (compare the injectionary impact,

    so far, by UNTAC of U.S. $200 million).

Having struggled to overcome the devastation of the Pol Pot days, which set back

Cambodia's economic development 20 to 25 years, there is a real risk of having to

face something with a similar socio-economic impact. This threat to recovery is the

main justification for insisting that AIDS be taken seriously today.

The threat of AIDS to economic development, needs to be viewed against one important

factor. If there is no change in the current rate of population growth, within 25

years Cambodia would have almost 20 million people. With the total population set

to double in half a generation, any slow-down in growth must be avoided at all costs

if living standards, already low, and possible social unrest are to be prevented.

As AIDS is already a huge problem in neighboring Thailand, an economic role-model

for many Cambodians, the subject has particular relevance in this context.

One must start with a few significant facts about HIV (Human Immuno-deficiency

Virus) and AIDS (Acquired Immuno-Deficiency Syndrome). Knowledge is fairly recent,

since the disease was only identified in 1981. Now we know that the HIV is transmitted

through bodily fluids in three ways:

  • During unprotected sexual intercourse (up to 80 percent of HIV infections occur

    this way, of which 10 percent are estimated to be due to homosexual activity);

  • Through infected blood (i.e. blood transfusions and multiple use of dirty contaminated


  • From mother to fetus-the chance of this happening can be as high as 20/30 percent-this

    accounts for another 10 percent of the total.

  • Studies in India, Thailand, Laos, Burma and China indicate the disease appears

    in stages that gather speed in a worrying way:

  • First, it spreads quickly among drug users and those sharing, for whatever reason,

    unclean needles;

  • Then, it moves rapidly through to prostitutes in cheap brothels and afterwards

    to more up-market establishments;

  • Next it zeros in on non-drug using male clients indulging in casual sex;
  • Finally, the virus starts to show up in the general low-risk population such

    as wives and girl friends of sexually active men.

One my ask, why focus on AIDS when there are other better known more serious killing

diseases in Cambodia?

There are two simple answers. Few realize the country is at risk. Some experts believe

that Cambodia is heading for an epidemic. If so, no one can afford to wait until

statistics prove the point; the economic costs would be too high. Second, AIDS has

a number of characteristics that make it unique among the world's diseases.

  1. No cure has yet been discovered for AIDS. If you get it you die.
  2. AIDS is a "young people's disease." It predominantly affects young

    adults in their prime. Most diseases hit the weak; AIDS hits the strong (15-45 years

    age range).

  3. HIV can stay dormant in the human body for a long time-up to 10 years on average.

    But, throughout this period an infected person can pass on the virus. When fatal

    symptoms suddenly appear-notably extreme weight loss-thereafter it is only a matter

    of time, less than one year, before death;

  4. HIV usually spreads because of certaintypes of social behavior. Thus the only

    way to contain AIDS is by changing the way people behave; as we are talking mainly

    of sexual behavior, this is a tall order.

All this suggests two things:

  • Finding a cure soon poses modern science with one of its greatest challenges;
  • Policy makers must develop a strategy to prevent the spread of HIV virus and

    to devise ways of lessening its consequences for society once the disease takes hold.

Thailand presents a dramatic illustration of the rapid onslaught of the disease.

Since its striking upsurge in 1988, largely among drug users, the number of infected

people has jumped in successive waves. Within only three years-up to 1989 there was

no recorded example of HIV infection in surveys of prostitutes-estimates of the number

who have now caught it practically equals the forecast rate of HIV infection for

the whole United States!

Every week, someone dies from AIDS in Thailand.

Socio-Economic Cost of AIDS:

These costs all stem from a dual inter-reaction:

  1. AIDS largely effects adults in their economic and socially most productive years;


  2. it hits the bread-winners, those physically and financially responsible for support

    and care of others (e.g. children and elderly parents, etc.);

There are separate but related economic aspects: the financial costs of fighting

AIDS, or direct costs, and the socio-economic costs, or indirect costs, to society

as a whole.

Direct costs: these need to be seen against a background of government budgets which,

in poor countries, face severe cash flow problems while their health budgets tend

to be under continuous strain. Here are some examples of extra costs.

More money will be required for:

  1. testing/guaranteeing HIV-free blood supplies;
  2. HIV testing of selected groups/setting up effective monitoring systems;
  3. provision of extra hospital space (current attitudes unfortunately insist AIDS

    patients be isolated), and facilities for orphans;

  4. training expenses for counsellors able to cope with victims with no real hope;
  5. providing special institutions for men/women who have become social outcasts

    (Buddhist monasteries can not be expected to assume the whole burden for free);

  6. vsubsidizing medical care (especially high cost drugs) for the poor;
  7. public purchasing of drugs and contraceptives;
  8. Finally, the expense of specific government education and prevention programs;

These costs are not small. In Thailand in 1991, HIV testing and providing AIDS-free

blood supplies amounted to nearly U.S. $2 million. Government education programs

cost an additional U.S. $20 million.

Public expenditure is not the whole story. Most individuals pay for their own treatment.

Estimates for Thailand show the cost impact of an AIDS patient on the family equals

between 30 to 50 percent of the yearly income-or 10 times current household spending

on health. Imagine what this will mean, proportionately, for an average Cambodian


There is a hard truth in this. Unless revenues and income earnings match increased

costs from rising health expenditure, there will be less to spend on consumption

and less money to save and invest at both the public and the private level.

The extra financial burden will obviously affect the pace of economic development.

Indirect costs:

Socio-economic costs cover a wide area. They are hard to calculate and their impact

depends on how quickly the disease spreads-something difficult to forecast.

Nevertheless, the key areas can still be listed.

Again, it is important to remember that all countries have to balance revenue resources

against other development priorities. Tackling the AIDS epidemic simply means that

government-in the short-term at least-will have to divert resources from existing

priorities to meet the new, unexpected challenge. A challenge that cannot be ignored

because it strikes at the roots of a society's future-its young people.

A growing number of AIDS victims will mean:

  1. all labor-intensive activities will suffer dislocation (in poor countries the

    farming system will be especially hit particularly because agriculture is based on

    small-holder plots);

  2. apart from the ordinary labor force, all factories, companies and firms in the

    service sector relying on skilled workers risk not only losing key staff but having

    to replace them with younger, less experienced personnel;

  3. this applies equally to government, administration and the military, where the

    loss of a critical person can have a disproportionate effect (particularly in Cambodia

    where lack of skilled personnel is already a major constraint on development);

  4. the net effect means that attempts to raise labor productivity-what really makes

    an economy grow over time-becomes harder as the stock of skilled human capital diminishes

    while its replacement cost increases;

  5. at the aggregate level this implies major alterations in production and consumption

    as society becomes unbalanced with pre-adolescent children, orphans, and elderly

    people taking up a bigger proportion of the whole. Although relative prices will

    obviously adjust over time, a large expanded non-productive group will nevertheless

    have to be taken care of by a relatively smaller number of producers on the pay roll;

  6. government budgets, already stretched, face unpopular tax decisions as more public

    expenditure is directed towards non-wealth producing health areas;

  7. none of the above items allow for another big unknown: the psychological effect

    of a country's AIDS reputation on tourism and foreign investment plans (both crucial

    hard currency inputs to the development process), not to mention the effect on decisions

    to return home on the part of qualified migrants abroad;

The listing, though indicative only, gives a sense of the economic perspective

that needs to be evaluated. It should also make any government, tempted to postpone

tackling the problem, think again.

Although it is extremely difficult to make reliable estimates of overall socio-economic

costs, an interesting attempt has been made in a sectorial study: "The Economic

Impact of AIDS in Thailand". This indicated that the cumulative cost to the

country of 470-560,000 deaths between 1991 and 2,000 would be between U.S. $7.3-8.5

billion. If, and it is a big "if", the same ratio was applied to Cambodia,

the figure would be in the realm of U.S. $221 million.

One thing is abundantly clear. The costs of preventative action are considerably

smaller than trying to cope with the after-effects of a full-blown epidemic.

Cambodia has a number of fairly unusual features. Taken together, they suggest a

greater degree of vulnerability than one may at first imagine.

Basically, there are two reasons: sudden changes in the country over the last two

years, and sexual andmedical practices.

Cambodia, with the signing of the Paris Peace Accords has been opened to the outside

world. A number of features have accelerated as a result. UNTAC's presence: a much

more mobile population (stemming from returning refugees, demobilized soldiers, displaced

persons trying to re-establish themselves); more traffic with Thailand, Laos and

Vietnam (as well as with HIV-infected people in these countries); growth of tourism;

and the expansion of the commercial sex industry. This adds up to a shifting society.

It also means that "human contact" diseases can spread that much faster.

Special Features:

  1. The tragedy of the Pol Pot era gave Cambodia a skewed population profile: young

    (43 percent under 14 years) and mainly female. Women are in the adult majority (63

    percent of the total adult population). Though their societal status rarely reflects

    it, they have become the dominant economic group (often the main bread-winner of

    the household, women run most small businesses; and are a major force on the land);

  2. The sex ratio imbalance has accentuated several things:
  • Polygamy, though illegal, is widespread (single women, especially urban females,

    are pressured to accept partners, even married ones, while men often leave their

    wives to set up house with someone else);

  • Poverty and prostitution go together. Studies show women continue to be the poorest

    in every village. In such situations a growing number of women, barter sexual favors

    for economic support. Poor women are turning to selling their bodies to pay off debts

    partly because this is seen as less degrading than begging. Poverty has increased

    women's risk as secondary targets for HIV infection;

  • Prostitution has grown since 1980 with new reports of brothels opening in provincial

    towns where none existed before. It is not just the number that compounds the problem,

    it's the high average number of clients per woman (up to 5-10 per day), and the rapid

    turnover with many brothel owners trying to bring in new girls every two weeks. It

    is not prostitution per se that causes HIV to spread, it is unprotected sex with

    such girls;

  • Like Thais, Cambodian males are promiscuous. Having a mistress is accepted as

    is frequenting brothels (a young man's first experience is invariably with a prostitute).

    Again, the problem is compounded by the habit of unprotected sex;

Other features, equally important add to the general vulnerability:
  • Cambodians have an odd custom that has become dangerous-the general preference

    for injections for all purposes when they feel ill. In every part of the city people

    with a needle and syringe stand ready to sell an injection service. Because of the

    severe shortage of needles and syringes and the means to sterilize them, the risk

    of infection from a used needle is substantial.

  • The State of Cambodia has only recently began to support direct family planning

    services because they long believed in the necessity for an expanding population.

  • This, together with the fact that virginity has a market value, means there is

    practically no sex education in the schools (only one big school in Phnom Penh this

    year). Parents or the "achar" (pagoda wise man) often only tell brides-to-be

    about the "facts" the night before their wedding. This is an indication

    that the general ignorance level, whether about contraception or the risk of sexually

    transmitted diseases, is greater than it need be;

  • As in most of Asia, condom (Srom Aknarmay or hygenic envelope) usage is very

    low even though condoms do two necessary things: reduce the risk of pregnancy and

    protect against venereal disease (abortion remains the main contraceptive method,

    followed by the pill, injectable hormones and the coil-IUD).

HIV was first discovered in Cambodia in 1991 through random blood testing. Sample

testing of voluntary donors has since shown a growing number of men of high school

and university age (18-25 years.; only seven percent of the sample were female) who

were HIV positive (see box).

Alhough the samples are small, what is of concern is the surge (150 percent) in the

rate of incidence among purely voluntary blood donors, even ignoring the high levels

found among sex workers. The figures have begun toeven run above the average for


Small samples give no reason for complacency. Victims are being infected every day

without realizing it because blood-testing is still not done on a wide enough scale.

What this implies is that data can just as easily be an under-estimate as an over-estimate.

While there are no known AIDS cases as yet in Cambodia-it would be really alarming

if there were the HIV virus is in Cambodia and, so far, it has not been treated as

seriously as it should have been.

To conclude, the first concern is the degree of risk. Two of the quickest ways of

catching the HIV virus are widely present throughout Cambodia: the tradition of unprotected

sex with the male having multiple partners; and widespread use of needles for injections

for the slightest medical problem. Given Cambodia's mobile population, whether looking

for work or a safe place to stay, this mobility can not but add to the dangers of

raising the existing speed of HIV transmission.

Second, extrapolating any of the estimates made for Thailand clearly indicate that

Cambodia's economy can not afford the consequences of a full-blown AIDS epidemic.

Finally, taking preventative steps while the problem is manageable is the least costly

option by far. Ignoring evidence until a major crisis is there for all to see, would

be the height of irresponsible government.

Unconvinced Cambodians should reflect on three things:

  • One of Pol Pot's mistakes was thinking that Cambodia did not need to learn or

    import anything from its neighbors or, that what happened elsewhere would not effect


  • As a recent report so graphically put it, relations with men, for many women,

    are tightly linked to questions of economic/social survival. Thus most women-Cambodia's

    major economic group at present-face one and only one possible risk of HIV infection-sex

    with their husband or boy friend;

  • Here, a traditional story comparing a Khmer girl to a piece of cotton wool and

    a boy to a diamond, is especially apt. According to the tale, a diamond, when dropped

    into the mud, can be washed as clean and as bright as before. Cotton wool, however,

    never regains its purity once dirtied.

If male sexual behavior does not adapt accordingly, the story will reverse: girls

will be diamonds, and boys, if unlucky, will end up like cotton wool!


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