Challenges Facing Developing Countries

Information document B Interoperability problems in the developing countries 1. Introduction1 2. Developing countries2 3. CIS and Europe4 4. Asia-Pacific5 5. Americas8 6. Africa10 Introduction The ITU has made significant commitments to developing countries in a series of instruments: †¢ Article 17 of the ITU Constitution that the functions of ITU-T are to be performed â€Å"bearing in mind the particular concerns of the developing countries†; †¢ Resolution 123 (Rev. Antalya, 2006) on bridging the standardization gap; and Resolution 139 (Antalya, 2006) which invites Member States to implement rapidly Resolution 37 (Rev. Doha, 2006) of the World Telecommunication Development Conference on bridging the digital divide. Between the developing and developed countries there is a general digital divide of which one part is the standardization gap. This is recognised in Resolution 44 (Johannesburg, 2008) as having three dimensions: †¢ The disparity of voluntary standard ization; †¢ The disparity of mandatory technical regulations; and †¢ The disparity of conformity assessment.Resolution 76 (Johannesburg, 2008) on conformance and interoperability testing considered: †¢ that some countries, especially the developing countries, have not yet acquired the capacity to test equipment and provide assurance to consumers in their countries; and †¢ that increased confidence in the conformance of information and communication technologies (ICT) equipment with ITU-T Recommendations would increase the chances of end-to-end interoperability of equipment from different manufacturers, and would assist developing countries in the choice of solutions. Noted: the need to assist developing countries in facilitating solutions which will exhibit interoperability and reduce the cost of systems and equipment procurement by operators, particularly in the developing countries, whilst improving product quality; Resolved: †¢ assist developing countries in identifying human and institutional capacity-building and training opportunities in conformity and interoperability testing; †¢ assist developing countries in establishing regional or subregional conformity and interoperability centres suitable to perform conformity and interoperability testing as appropriate;Instructed the Director of TSB: †¢ to conduct exploratory activities in each region in order to identify and prioritize the problems faced by developing countries related to achieving interoperability of ICT equipment and services; The following sections review the issues of developing countries then the interoperability problems identified by developing countries in the different regions: CIS & Europe, Asia-Pacific, the Americas, Africa and the Arab states. Developing countries The ITU holds developing countries to include three specific categories: Least Developed Countries (LDCs); †¢ Small Island Developing States (SIDS); and †¢ Countries with Economi es in Transition (EIT). It does not define these terms, but uses the definitions provided by the General Assembly of the United Nations and by its Economic and Social Council (ECOSOC). [1] Least Developed Countries (LDCs) can be identified by the following three criteria: †¢ Low-income, a three-year average of Gross National Income (GNI) per capita (under US$ 745 for inclusion, above US$ 900 for graduation); A composite Human Assets Index (HAI) based on: percentage of population undernourished, mortality rate for children aged five years or under, the secondary school enrolment ratio and adult literacy rate; and †¢ A composite Economic Vulnerability Index (EVI) based on: population size, remoteness, merchandise export concentration, share of agriculture, forestry and fisheries in GDP, homelessness owing to natural disasters, instability of agricultural production, and instability of exports of goods and services.While there is considerable overlap between LDCs and SIDS, th e latter face significant additional problems to achieve sustainable development, because of their small populations, limited resources, remoteness, susceptibility to natural disasters and excessive dependence on international trade. The growth and development of SIDS have been disadvantaged by high transportation and communication costs (e. g. , use of satellites in the absence of undersea cables), disproportionately expensive public administration and infrastructure (due to their small size) and the absence of opportunities to create economies of scale. 2] Countries with Economies In Transition (EIT) are those moving from a centrally planned economy to a free market. This requires economic liberalization, the removal of price controls, the lowering of trade barriers, the restructuring and privatization of financial and industrial sectors. It is usually characterised by the creation of new institutions, including private enterprises taking on activities previously performed by the state and new instruments for state governance, such as a national regulatory authority for telecommunications.In the 1990s, these comprised the countries formerly members of the CMEA, some of which are now members of the WTO and the EU. The problems faced in EITs have included the absence of a constructive policy framework, the slowness of the establishment of the network infrastructure, the training of people to use it and to exploit commercially the information and knowledge that it makes available. The issue of interoperability has become more important as countries deploy e-government systems. In order to provide high-quality services to citizens it is important that services can be accessed from the widest possible range of equipment.UNDP has published an e-primer on e-government, setting out the vision and value of interoperability and the steps required to achieve this. It explains the value of e-government interoperability frameworks, the parties that need to be involved an d are the critical success factors. InfoDev has an eGovernment Handbook for developing countries. Despite the enormous progress made in bridging the digital divide and, in particular, the standardization gap, there remain significant problems in terms of conformance and interoperability due to: Lack of human capacity and of training opportunities; and †¢ Weak institutional systems for: o Standardization, o Testing, o Certification, and o Market surveillance. However, the challenges are far from uniform, requiring careful assessment of regional and national circumstances and experiences. CIS and Europe The European Union has legal provisions that directly address interoperability and empower regulatory authorities to ensure the interoperability of systems (see information document C).For example, the EC adopted DVB-H as a common standard for mobile television to achieve interoperability throughout Europe. In 2005, the ITU published a study entitled Towards Interoperable eHealth for Europe with the Telemedicine Alliance. A previous study had identified interoperability as a major obstacle to the implementation of eHealth, which the second report addressed in the form of a strategic plan for trans-national eHealth interoperability. Its aim is to assist stakeholders at all levels in taking action to achieve real and sustainable interoperability. 3] As part of its eHealth Action Plan, the European Commission has adopted a Recommendation on cross-border interoperability of electronic health record systems (2008/594/EC). This will ensure that electronic health record systems interoperate, allowing health professionals from another country to access vital patient information from a home doctor and hospital, improving the quality and safety of medical care. The International Virtual Laboratory for Enterprise Interoperability (INTEROP-VLab) emerged from research projects funded by the European Commission.Its mission is to consolidate, develop and maintain the Europ ean research community in the domain of Enterprise Interoperability. In the United Kingdom, a survey of IEEE 802. 11b/g Wi-Fi usage for the Office of Communications (OFCOM) found a wide variety of problems, many due to causes other than spectrum (e. g. , wired Internet and device configuration errors). Spectrum issues tended to be interference between devices in the 2. 4 GHz ISM band, rather than congestion.However, in the centre of London demands on the band were higher than elsewhere and users experienced both interference and congestion. Interference between different types of radio device lead to a proposal for a certification scheme with a broad ‘2. 4 GHz friendly’ logo rather than the conventional ‘Wi-Fi-friendly’ mark, to help drive acceptance of innovative technologies in that band. Asia-Pacific One of the poorer of the Asian countries was the beneficiary of a sequence of initiatives by national and international aid programmes to assist the evelopm ent of its telecommunications infrastructure. [4] A side effect of this was that the equipment provided or purchased in the different projects were from different manufacturers, often selected by or linked to the donor agency. However, the variety of equipment could not easily be made to interoperate. The effects on the country were to increase the costs of training for its limited pool of technicians and experts (often with international travel), while it reduced the flexibility of use of the equipment.The already limited economies of scale in this country were made worse by fragmentation across different networks and systems, raising the costs for operators and thus for citizens. Within the Asia-Pacific Telecommunity Standardization Programme (ASTAP), the Industry Relations Group (IRG) addresses the needs and concerns of operators and manufacturers. At the 11th Meeting of ASTAP in June 2006 there was a Workshop on Conformity Assessment in the APECTEL Mutual Recognition Arrangement s (MRA).It was recognized that input from industry input into ASTAP and APECTEL could help to improve their operation. The IRG subsequently developed a questionnaire on type-approval and conformity assessment. Between June 2006 and February 2007, responses were obtained from 21 companies and 4 regulators, in Afghanistan, Australia, Iran, Japan, Macau SAR, Papua New Guinea, Singapore and Thailand. This identified issues in terms of: †¢ Costs: o Mandatory in-country testing, rather than accepting certified test results from other countries, Preparation of documentation for submission to the regulator, o Testing to meet specific national standards not aligned with international standards; †¢ Delays: o Time taken to approve a product after documents are submitted, o Testing to national standards not aligned with international standards. The survey identified actions to improve type approval process, including the recognition of certified test reports from other countries by Au stralia and Singapore, and limiting standards in technical regulations to international standards, avoiding national variations.An Asia-Pacific regional compliance mark was proposed, one that would be accepted by all national authorities, without further testing or documentation. The IRG called for national authorities to accept accredited test reports from other countries in order to reduce costs and time delays in type approval. The expansion of telecommunication networks, both in geographic coverage and the range of services, in response to market demand is a continuous process for operators, especially in very rapidly growing Asian markets. Operators have two options: a) Procurement of equipment from the original vendor; or ) Procurement of the best value equipment available at the time, not necessarily from the original vendor. However, the second option is not always possible as equipment from different vendors may not be fully interoperable. The procurement of additional equi pment is, therefore, constrained to be from the original vendor. The practical difficulties faced by this lack of interoperability in two types of networks are explained below. There are many proprietary implementations of Mobile Switching Centres (MSCs), Base Station Controllers (BSCs) and Base Station Transceivers (BTSs).Although the interface between the MSC and the BSC is now considered stable, the Abis interface between BSCs and BTSs is not yet interoperable (see Figure 1). Where additional BTSs are required, in order to meet growing demand, the network operator is constrained to purchase these from the vendor whose BSCs are already deployed. Figure 1Issues related to mobile networks [pic] An operator in India has experienced interoperability issues in the expansion of its GSM network. Its planners assumed that BSCs and BTSs required to be supplied by the same vendor, due to the proprietary interface between the two.However, the interface between the BSC and the MSC, which is a n open standard, required considerable time and effort before interworking could be achieved between equipment from different vendors. Two of the essential components for Intelligent Network (IN) services are the Service Control Point (SCP) and the Service Switching Point (SSP), the latter is normally part of the switch or local exchange (see Figure 2). Consequently, whenever the operator needs to deploy a new switch it has to be purchased from a single supplier, to ensure interoperability with existing infrastructure.Figure 2Issues related to fixed Intelligent Network (IN) [pic] An Indian operator found that SCPs failed to interwork with SSPs from different manufacturers. This issue is considered critical in view of the regulatory requirement to interconnect INs of different service providers. In April 2009, at the CTO/ITU-T Forum on NGN Standardization in Sri Lanka, the issue of non-interoperability was raised. Rajeshwar Dayal from the Indian Department of Telecommunications (DoT) , identified the need for interoperability between and within NGNs (see slides).The following month at the ITU Regional Preparatory Meeting for the Asia and Pacific Region, India proposed that ITU prepare a reference document containing interoperability requirements at the equipment level to help smooth the implementation of NGNs. An NGN Pilot Project by the Iran Telecom Research Center (IRTC) identified a number of problems associated with NGNs supplied by: Alcatel, Huawei, Siemens and ZTE (presented at ITU Kaleidoscope). [5] This acknowledged that NGN was not yet a mature technology and therefore subject to interim problems, that should eventually be eliminated.Tests were conducted initially between equipment of a single vendor, then between different vendors. Problems were identified with the implementations of the ITU-T G. 729 codec and ITU-T H. 248, plus difficulties with the call servers from one manufacturer not being able to control the access, media or signaling gateways of other vendors. The problems had been caused by some vendors not implementing standards completely or having done so imprecisely, while some standards were found to contain ambiguities. AmericasIn the USA, Section 256 of the Communications Act of 1996 requires the FCC to establish procedures to oversee coordinated network planning by providers of telecommunications services. The Act also authorizes the FCC to participate in standards organizations working on network interconnectivity. It is advised by the Network Reliability and Interoperability Council (NRIC), which makes recommendations to ensure, under â€Å"all reasonably foreseeable circumstances†, interoperability of networks, including reliability, robustness, security and interoperability of communications networks.One of the major issues addressed by NRIC in recent years has been to ensure the interoperability of enhanced services for emergency calls (i. e. , to 911). Interoperability for e-government has been addres sed by the Chief Information Officers Council (CIO). Concerns over problems of the non-interoperability of emergency services communication systems became a matter of public concern, following possibly avoidable deaths of firemen in the collapse of the New York World Trade Center on 9th September 2001 and again after Hurricane Katrina. 6] The US Congress called for work to resolve interoperability problems in emergency response communications. [7] To achieve the political objectives, Project 25 (P25) was established as a development process for the design, manufacture and evaluation of interoperable digital two-way wireless communications products for public safety services. The suite of P25 standards is administered by the Telecommunications Industry Association (TIA) and consists of the following interfaces: †¢ Common Air Interface (CAI); †¢ Inter-RF Subsystem Interface (ISSI); †¢ Fixed/Base Station Subsystem Interface (FSSI); †¢ Console Subsystem Interface (CS SI); Network Management Interface; †¢ Data Network Interface; †¢ Subscriber Data Peripheral Interface; and †¢ Telephone Interconnect Interface. The P25 Compliance Assessment Program (CAP) is a partnership between the Department of Homeland Security’s Command, Control and Interoperability Division (CID), the National Institute of Standards and Technology (NIST), suppliers and the emergency services. It seeks to: †¢ Ensure that emergency response technologies meet the needs of practitioners; †¢ Assist officials in making informed purchasing decisions; †¢ Provide vendors with a method of testing equipment for P25 compliance; and Support the migration to standards-based communications systems. As of May 2008, eight private laboratories had been accredited, using ISO 17025, for P25 conformance testing. These can test equipment against standards that ensure radios and other equipment interoperate – regardless of manufacturer – enabling em ergency responders to exchange critical communications. Additionally, there two non-governmental bodies as: †¢ Emergency Interoperability Consortium (EIC); and †¢ OASIS Emergency Interoperability. These work on the development of appropriate standards. Anatel has identified problems with fixed network equipment in: Incompatibilities with: o xDSL: between chipsets in Central Office (CO) and Customer Premises Equipment (CPE), and o GPON: between Optical Line Terminals (OLT) and Optical Network Units (ONU); †¢ Interoperability problems between: o softswitches using SIP and SIP-I standards, o PABX-IP equipment and NGN, and o Call Agent (CA) and Media Gateway (MG), when using the T. 38 fax with MEGACO protocol. Similarly with mobile networks, it has found problems with Inter-RAT (Radio Access Technology): †¢ Voice and data failures going from 2G on 1,800 MHz to 3G on 850 MHz and vice versa; On registration, instead of performing a type 02 a type 00 location update was performed; †¢ With 2G, on moving from 900 MHz to 1800 MHz and vice versa there were voice call interruptions; †¢ Despite automatic network search for 3G on 850MHz band, first tried a type 00 location update with 2G on 1800 MHz; †¢ A loss of network signal with 2 or 3G on any frequency band, terminals failed to repeat network registration when in an area with network signal; and †¢ Where there was no roaming enabled, but a secondary IMSI was available the SIM card terminal did not automatically restart the application for the second IMSI.Africa Much of the ICT equipment in developing countries is old, but has yet to be withdrawn from use, because of limited capital to purchase replacements. The interfaces and protocols of such systems are not able to communicate with any modern systems that are more complex and sophisticated. It required the use of gateways which reduces functionality and increases costs. For example, one international operator wishing to provide lower cost international connectivity into a NE African country had to provide a special gateway to what it considered obsolete technology.Unlike in the developed world, most African countries do not have laboratories to test whether or not communications equipment and systems conform to the required international, regional and national standards, making interoperability testing a challenge. Exceptions include Egypt, Morocco, South Africa and Tunisia (see information document I). Rwanda has seen a profusion of very low-cost GSM handsets. Like India, many of these have proved to be counterfeit, with no proof that they comply with international safety standards or that they conform to network standards and interoperate without causing problems.Tanzania has identified a number of issues shown in Table 1. Table 1Interoperability issues in Tanzania |SN |Item |Positive |Concern | |1 |Antennae have different standards |Incentive to roll out in |Joined networks instead of single network th at | | |for different vendor and types |underserved areas |result in duplication of investment and operational | | |e. . space diversity, combining, |Increased employment |expenditure e. g. spare stock, training | | |polar | | | |2 |New technology (upgrade) |Increased competition |Delays or not possible to access some application or| | |compatibility with old versions |Service differentiation |documents e. g Windows 2003 to 2007 or VISTA. | |but not vice versa | |Forced to change from R2 signalling for circuit | | | | |(packet) switching and later likely to IP else miss | | | | |VAS applications | | | | |Environment issue e. g.Exposure or Recycle of | | | | |absolute equipment such as antennae | |3 |Pre-paid and online payment |Easy customer entry and |Revenue stream authenticity | | |(credit card) |consumer choice of services |National Security issues | | | | |e. g. satellite phones | |4 |Liberalization of International |Competitive tariffs |Cyber security. | |gateways. |Improved q uality of services |With multiple gateways how ccTLD and Internet | | |VSAT, Earth stations, submarine | |exchanges are to be on optimal use. | | |cables and optic fibre | |Incoming international traffic revenue loss? | |5 |Transmission systems. PDH and SDH |Incentive to roll out broadband|Different control and operational procedure (Central| | |and mono mode and DWDM optic fibre|data |operation management systems).Complex and costly | | |Core switch (TeS, NGN) not able to|Possible sharing of capacity |integration for various vendors | | |parent various media gateways, RSU|(infrastructure) |Need to share customer information e. g. from EIR or | | |(xDSL) |Increased employment |blacklist and fraudsters. | | |Access interface V5. 1 and V5. 2 | |Difficult or too costly to integrate various vendor | | | | |equipment in the network.While specializing to a | | | | |single vendor also ties to limited QS, services and| | | | |costly upgrades. | |6 |Revenue assurance systems |Increase Custom er satisfaction |Integration of modules for fixed, GSM and CDMA are | | | |Quality of service monitoring |likely to be too costly | | | | |Integration of data and voice |Few countries in Africa have in place the necessary accreditation systems and technical regulations need to provide a framework for the granting of certificates and licenses for the provision of communications services or the supply of telecommunications equipment. There is a general lack of expertise and human capacity in standardization. African countries have been less able than developed countries to participate in and to influence standards making processes.One consequence of this is that they have been much less involved in the work of devising conformity and interoperability tests and then of conducting the tests of equipment and services. Training in standardization and testing has been insufficient and when available been expensive or involved travel. This has resulted in a lack of understanding of test res ults when they are submitted from accredited laboratories. In particular, there is a lack of understanding of international standards concerning the implementation of interoperability of ICT systems and devices.The large and growing number of producers of standards is seen as confusing, especially since the standards and the resulting equipment and interfaces are mostly not interoperable. As with the Indian example, African operators have encountered problems interoperating BSCs and BTSs from different manufacturers. Some types of equipment conforming to international standards are intended to operate in specific radio frequency bands, but this spectrum may not be available in Africa.This has made the efficient use of radio spectrum one of the key challenges African countries confront and which has brought about interoperability problems. The Southern Africa Telecommunications Association (SATA), a group of fixed incumbent operators, has identified specific interoperability challeng es (see Table 1), relating to NGN equipment. Table 2Southern African interoperability challenges (Source: SATA) Equipment supplier and type |Interoperability problems with | | |Equipment Supplier |Equipment Type | |Huawei Technologies SoftSwitch |Nokia Siemens Networks |Trunk Gateway | |Huawei Technologies SoftSwitch |ZTE |CDMA Equipment (Fax problems) | |Huawei Technologies SoftSwitch |Alcatel-Lucent |WiMAX WAC | |There are several interoperability issues between the BOSS and the Element Managers from different suppliers. | |The standard Northbound interfaces between EM and the OSS are not always open, or the supplier is not willing to open | |those interfaces. | In summary, Africa faces the following problems: †¢ Increased supply of poor quality equipment; †¢ Difficulties in the selection of interoperable equipment from a wide range of vendors; †¢ Lack of testing centres, facilities and trained professionals; †¢ Lack of national or regional laws and regulations ; and †¢ Lack of understanding of ITU-T Recommendations, the conformance tests and their results. ———————– 1] Specific tasks have been assigned by the United Nations to the Office of the High Representative for the LDCs, Landlocked Developing Countries (LLDCs) and SIDS (OHRLLS). [2] The telecommunications needs of SIDS are being studied by ITU-D under Question 23/2. [3] See, for example, European Connected Health Leadership Summit ‘A Manifesto for Connected Health’ [4] Permission has not yet been granted by the country to disclose its name. [5] http://ieeexplore. ieee. org/ielx5/4534704/4542234/04542262. pdf? arnumber=4542262 and http://ieeexplore. ieee. org/ielx5/4115171/4115172/04115219. pdf? isnumber=4115172 [6] Jerry Brito (2007) Sending out an S. O. S. public safety communications interoperability as a collective action problem. Federal Communications Law Journal 59 (3) 457-92. [7] Senate Report 109-088. Departments of Commerce and Justice, Science, and Related Agencies Appropriations Bill, 2006. House Report 109-241. Making Appropriations for the Department of Homeland Security for the Fiscal Year Ending September 30, 2006, and for Other Purposes. ———————– BTS of Vendor A BSC of Vendor A MSC of Vendor A BTS of Vendor B Proprietary/Non-interoperable interface SSP of Vendor B Switch /LE Calling Card User Switch /LE SCP SSP SSP SCP of Vendor A SSP of Vendor A Called Subscriber Proprietary/Non-interoperable interface Challenges Facing Developing Countries Challenges Facing Developing Countries Janita Aalto Principles of Microeconomics ECO 204 Instructor Kathryn Armstrong March 28, 2011 Challenges Facing Developing Countries Developing countries, also known as third and fourth world countries; face economic challenges that first world countries do not face, on a large scale. Poverty, low literacy rates, poor investments in both human capital and domestic capital, poor nutrition and devastation to populations due to the HIVAIDS pandemic contribute to developing countries moving towards development. The primary focus of this paper is to explore the impact the HIV/AIDS pandemic has had on Sub-Sahara African economies and to explore the challenges facing developing countries to stimulate domestic savings. The impact on the economies of some of the African countries is still not completely known. If we look at economic impacts, first we must look at the human cost HIV/AIDS is having on Africa’s economic development and ability to cope with the pandemic. According to an online journal, there are four variables that outline the effects on Africa’s future development: â€Å"Economic research helps to estimate the effects of HIV/AIDS on the African economy and the cost effectiveness of prevention and treatment programmes; Economic theory predicts that HIV/AIDS reduces labour supply and productivity, reduces exports, and increase imports; The pandemic has already reduced average national economic growth rates by 2-4% a year across Africa; Prevention and treatment programmes and economic measures such as targeted training in skills needed in key industries will limit the economic effects of HIV/AIDS†, (BMJ. 2002, p. 232). In examining the economic effects of HIV/AIDS, it is hard to look past the fact that over 17 million African people have lost their lives to HIV/AIDS and has 70% of all HIV/AIDS related cases in the world. These are staggering statistics. As outlined in the above journal article, the mortality rates have ca used a reduced labor supply, reduced labor productivity and reduced exports and increased exports. The population of people hardest hit by the HIV/AIDS pandemic are the prime-aged adults. HIV/AIDS robs industries of both skilled workers and a generation of workers in their prime working years. The associated illnesses and sickness as a result of HIV/AIDS can lead to high absenteeism which impacts labor productivity. The effects of a reduced labor supply and reduced labor productivity, â€Å"reduces exports, while imports of expensive healthcare goods may increase. The decline in export earnings will be severe if strategic sectors of the economy are affected. The balance of payments (between export earnings and import expenditure) will come under pressure at the same time that government budgets come under pressure. This could cause defaults on debt repayments and require economic assistance from the international community†, (BMJ. 2002, p. 233). In a 1992 macroeconomics a study on the impact of HIV/AIDS in Africa, it was concluded that â€Å"reduced availability of skilled labour would reduce growth rates by about 50% and investment by 75%, that imports of food and other basic products would increase, and that exports of manufactured and other products would decline†. It was also estimated that by 2010, â€Å"South African’s GDP per capita would be some 8% low and consumption per capita would be about 12% lower than would have been the case without the HIV/AIDS pandemic†, (BMJ. 2002, p. 234). The pandemic will have lasting effects on the economic development on the Sub-Sahara African countries without international assistance. â€Å"An important step in limiting the economic effects of the pandemic is to develop comprehensive policies tailored to the needs of the economies of individual countries. These policies will inevitably include the introduction of treatment and prevention programmes but may also include economic measures, such as targeted training of skills needed in key industries†, (BMJ. 2002, p. 234). One way to help stabilize the economy may be to push expensive antiretroviral drugs at â€Å"highly productive groups of socioeconomic groups in specific industries on the basis of their contribution to economic output rather than their healthcare needs†, (BMJ. 2002, p. 235). This would most likely be a controversial plan, but the strategy would help the people in those groups and buy time for skills training and development of a new work force to replace those that will either lose their health or their lives. It would also boost the economy if industry production levels can be maintained and exports of goods can remain at a profitable pace. The pandemic is having a major effect on life expectancy, which has been dropping. â€Å" In Zimbabwe, for example, life expectancy is 40 instead of 69. In seven countries in Sub-Saharan Africa, life expectancies are below 40 years of age†, (CHG, 2009, p. 3). Not only does this impact the work force, but impacts the children, many of whom lose not only one, but both parents, and other family members that might be able to take them in. Instead these children now become a government responsibility, as they are put into orphanages, group homes, etc. It is estimated that there are 15 million orphaned children across Africa. Standards of living are decreasing, and countries that were once starting to make progress both socioeconomically and economically are headed backwards instead of forward. Poverty is increasing as the family breadwinners are dying or becoming incapacitated by their illnesses. If there are savings, those savings are dwindling as people use their savings just to survive. With mainly young adults dying off, the tax base is shrinking which reduces a countries ability to invest in human capital, such as education and health services, which puts pressure on government finances and reduces economic growth. Investment in education is not a priority with the belief that children will contract HIV/AIDS in adulthood. The poor education of children translates into low adult productivity a generation later. This raises important social and fiscal implications for economic policy. The first is the threat of worsening inequality. If the children left orphaned are not given the care and education en joyed by those whose parents remain uninfected there will be increasing inequality amount the next generation of adults and the families they form†, (CHG, 2009, p. 6). Investing in human capital is one of the keys to bringing economic growth to developing countries. According to an online website, human capital is defined as â€Å"the set of skills which an employee acquires on the job, through training and experiences†, (InvestorWords. com). An investment in human capital also includes; development of and access to, health and nutrition programs. â€Å"Recent studies suggest that 40 percent of the population of the developing nations has an annual income insufficient to provide adequate nutrition†, (Case, Fair & Oster, 2009, p. 427). Low nutrition affects health and poor health affects productivity. Low productivity levels then affect the ability to provide for one’s family, let alone provide any surplus that can be sold and the money put into savings. There are two explanations as to why capital is in such short supply in developing countries. The first is the vicious-cycle-of-poverty hypothesis. According to our text, â€Å"the vicious-cycle-of-poverty hypothesis suggests that a poor nation must consume most of its income just to maintain its already low standard of living. Consuming most of national income implies limited savings, and this implies low levels of investment†, (Case, Fair & Oster, 2009, p. 428). Investment is needed for capital stock to grow and for income levels to rise. Without it, â€Å"poverty becomes self-perpetuating†, (Case, Fair & Oster, 2009, p. 428), and the cycle is complete. The second explanation is that there is a lack of financial incentives for citizens to save and invest, as well as a lack of financial institutions. It is common for the wealthier citizens to invest their monies in Europe or the United States instead of in their own countries. The term for this is capital flight, which â€Å"refers to the fact that both human capital and financial capital leave developing countries in search of higher expected rates of return elsewhere or returns with less risk†, (Case, Fair & Oster, 2009, p. 428). According to an online article, â€Å"Africa is estimated to lose hundreds of billions of dollars in domestic revenues annually through capital flight†, (Africa Renewal, 2008, p. 12). In order to reverse this trend, it is imperative that the government remove the barriers that turn away wealthy citizens from investing in their own countries. Without domestic savings, investment isn’t possible. Without investment, growth isn’t possible and this cycle continues much like the vicious-cycle-of-poverty hypothesis. What decisions do leaders of a developing country make in order to stimulate domestic savings and in turn, capital? If I were the President of a developing country, I would invest in human capital and banking reform. In investing in human capital, I would target health and nutrition programs for kids and young adults, the next generation of workers. With life expectancy rates falling, efforts must be made to reverse that trend. A much larger investment in education would be made; incentives for college kids that go to school abroad to return to their home country and work in their field for a required number of years. I would emphasize training and skill development for replacement workers in the industries hit hardest by HIV/AIDS. In investing in banking reform, I would offer incentives to people who put their money in banks and other financial institutions. Some of the reasons African people in particular do not put money in savings accounts are; â€Å"physical distance from banking institutions, high minimum deposit and balance requirements†¦and the considerable documentation needed to open an account†, (Africa Renewal, 2008, p. 7). There are also a limited number of banks available and with over 60 percent of African people living in rural areas, they just don’t have physical access to banks, unless they travel a long distance. In order to convince people to put their savings in banks, interest paid on savings would need to be high and interest rates on loans low. Somehow, people must be encouraged to place their money into savings so money will be available for future investments. â€Å"The UNCDF noted in its 2004 report that in Rwanda about half a million savings passbook accounts, with an average account size of $57, pulled almost $40 mn into circulation in 2001. â€Å" Although this may not appear significant†, argued the UNCDF, â€Å"proper circulation of these funds into credit products could have a significant multiplier effect in the Rwandan economy†, (Africa Renewal, 2008, p. 7). Poverty, low literacy rates, poor investments in both human capital and domestic capital, poor nutrition and devastation to populations due to the HIVAIDS pandemic contribute to developing countries moving towards development. For these countries to become economically viable, the governments must encourage citizens to invest in their own countries and not rely on international assistance. It’s time for both the citizens and the governments to step up and help themselves. References: Case, K. E. , Fair, R. C. and Oster, S. E. (2009) Principles of Microeconomics (9th ed. ) Upper Saddle River, New Jersey:   Pearson Prentice Hall. Dovi, E. (2008) Boosting domestic savings in Africa: From Africa Renewal, Vol. 22#3 (October 2008), page 12, Retrieved on March, 26, 2011, from http://www. un. org/ecosocdev/geninfo/afrec/vol22no3/223-boosting-domestic-savi ngs. tml Economic Commission for Africa, CHG: Commission on HIV/AIDS and Governance in Africa: Africa: The Socio-Economic Impact of HIV/AIDS, Index No. CHGA-B-11-003, Retrieved on March 27, 2011, from http://www. uneca. org/chga/doc/SOCIO_ECO_IMPACT. pdf InvestorWords, Retrieved on March, 20, 2011, from http://www. investorwords. com Copyright ©2011 by WebFinance, Inc. ALL RIGHTS RESERVED. PubMed Central: The impact of HIV and AIDS on Africa’s economic development Simon Dixon, Scott McDonald, and Jennifer Roberts BMJ, 2002 January 26; 324(7331):232-235 PMCID:PMC1122139 ; Retrieved on March 25, 2011, from http://www. ncbi. nlm. nih. gov/pmc/articles/PMC1122139