This study sets out to investigate how revenue from the Southern African Customs Union (SACU) common revenue pool affect efforts to contain HIV/AIDS in Botswana, Lesotho, Namibia and Swaziland (BLNS countries). Using a panel data set of the BLNS countries covering the period 1990-2007 in annual frequency and a health production function, we show that an increase in either SACU revenue or aggregate government expenditure increases HIV prevalence rates. Disaggregating the government expenditures into health and non-health outlays reveals that the health expenditure component decreases HIV prevalence rates. We argue, therefore, that the type of public expenditure matters: public health expenditures decrease while public non-health expenditures increase HIV prevalence rates, with the ultimate direction of HIV prevalence rates determined by the dominant of the two effects.
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