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AbstractThis study examines the economy‐wide implications of infectious diseases, taking the case of the Covid‐19 pandemic in Uganda. Covid‐19 containment measures generated social and economic consequences. We employ a recursive dynamic computable general equilibrium model to evaluate the implications on the economy. We design scenarios to mimic the containment policies via labour supply, labour productivity, government healthcare spending and remittance inflows. Results indicate that growth in sector output declines when compared to the no‐Covid‐19 baseline. However, export growth rates are predicted to be higher. Increased government healthcare spending induces expansion in the healthcare output, but the sectors that produce the intermediate inputs for healthcare production do not grow in tandem. Household welfare declines, and the loss is largest among the top quintile households in both rural and urban areas. Policymakers should revisit Uganda's industrial policy towards domestic production of intermediate inputs to critical domestic sectors such as healthcare. Also, accelerate rural infrastructure development particularly the road network, to facilitate an integrated rural economy induced by the shift in labour and enterprise towards rural areas.

Studies on global health and development suggest that there is a strong correlation between the burden of disease and a country's level of income. Poorer countries tend to suffer more deaths from preventable causes such as communicable, maternal, perinatal and nutritional conditions, compared with high-income countries. In low-income countries, the government health expenditure share in the general government budget is low and out-of-pocket payments for healthcare relatively high. They also rely heavily on external resources for health funding, yet sustainability of external resource flows is not guaranteed. This article explores increasing public healthcare funding from domestic resources mobilization, and evaluates the impact of measures to achieve this on sectoral growth and poverty reduction rates in Uganda using a dynamic computable general equilibrium model. This article shows that increasing the government health budget share, facilitates expanded healthcare services, improved population health, higher sectoral growth and reduced poverty. The agricultural sector is predicted to post the highest growth when compared with services and industry sectors under both domestic taxation and aid funding scenarios, while national poverty is predicted to decline from 31 to 12% of the population by 2020. This article demonstrates that the most effective measure is to frontload investment in healthcare and generate additional domestic funding for health from a household tax earmarked for health.