IDEAS home Printed from https://ideas.repec.org/p/cdi/wpaper/115.html
   My bibliography  Save this paper

On The Economic Vulnerability Of Low Income Countries révisé, cf 2000.16

Author

Listed:
  • Patrick GUILLAUMONT

    (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

Abstract

This paper examines the relevance of the economic vulnerability concept for low income countries, a topic of recent concern in several international bodies. It first considers some conceptual clarifications and a method to build an internationally comparable indicator. Three factors of vulnerability are distinguished: shocks, exposure and resilience or capacity to react (the first two ones being more structural, the third one more related to policy). To measure the two main kinds of shocks (natural and external), proposed proxies are respectively the instability of agricultural production and the instability of the purchasing power of exports, while the (smallness of) the population size can be used as a proxy for (structural) exposure. To aggregate the various possible indicators in a composite index of (structural) economic vulnerability, weights can be drawn from their estimated impact on growth. Then selected issues related to the impact of vulnerability on growth are considered: "primary" instabilities (climate, terms of trade, political troubles) are found to slow growth, more by their effect on the total factor productivity growth than on the rate of investment, to do so through "intermediate" instabilities (of the rate of investment and of the real exchange rate), and in agricultural economies through the impact at the farmer level. Besides its negative effects on growth, vulnerability is assumed to increase aid effectiveness: the more the recipient country is vulnerable the more aid contributes to growth. Implications are drawn for aid allocation and aid design.

Suggested Citation

  • Patrick GUILLAUMONT, 1999. "On The Economic Vulnerability Of Low Income Countries révisé, cf 2000.16," Working Papers 199916, CERDI.
    • Handle: RePEc:cdi:wpaper:115
    as

    Download full text from publisher

    File URL: http://publi.cerdi.org/ed/1999/1999.16.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Aizenman, Joshua & Marion, Nancy, 1999. "Volatility and Investment: Interpreting Evidence from Developing Countries," Economica, London School of Economics and Political Science, vol. 66(262), pages 157-179, May.
    2. Guillaumont, Patrick & Jeanneney, Sylviane Guillaumont & Brun, Jean-Francois, 1999. "How Instability Lowers African Growth," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 8(1), pages 87-107, March.
    3. Lim, David, 1980. "Income Distribution, Export Instability, and Savings Behavior," Economic Development and Cultural Change, University of Chicago Press, vol. 28(2), pages 359-364, January.
    4. Ramey, Garey & Ramey, Valerie A, 1995. "Cross-Country Evidence on the Link between Volatility and Growth," American Economic Review, American Economic Association, vol. 85(5), pages 1138-1151, December.
    5. Rodrik, Dani, 1999. "Where Did All the Growth Go? External Shocks, Social Conflict, and Growth Collapses," Journal of Economic Growth, Springer, vol. 4(4), pages 385-412, December.
    6. Claudio Araujo, 1995. "Les producteurs brésiliens et l'instabilité des prix : Différences de comportement entre le Nord et le Sud," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 43(3), pages 443-461, November.
    7. Guillaumont, Patrick & Guillaumont, Sylviane & Plane, Patrick, 1988. "Participating in African monetary unions: An alternative evaluation," World Development, Elsevier, vol. 16(5), pages 569-576, May.
    8. David Dollar & Craig Burnside, 2000. "Aid, Policies, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 847-868, September.
    9. Patrick GUILLAUMONT, 1999. "Reducing Poverty By Aid Reallocation: Uncertainties And Alternative Assumptions," Working Papers 199928, CERDI.
    10. Collier, Paul & Guillaumont, Patrick & Guillaumont, Sylviane & Gunning, Jan Willem, 1997. "Redesigning conditionality," World Development, Elsevier, vol. 25(9), pages 1399-1407, September.
    11. Lin, William, 1977. "Measuring Aggregate Supply Response Under Instability," 1977 AAEA-WAEA Joint Meeting, July 31-August 3, San Diego, California 283678, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Serven, Luis, 1997. "Irreversibility, Uncertainty and Private Investment: Analytical Issues and Some Lessons for Africa," Journal of African Economies, Centre for the Study of African Economies, vol. 6(3), pages 229-268, Supplemen.
    13. Collier, Paul & Dollar, David, 2002. "Aid allocation and poverty reduction," European Economic Review, Elsevier, vol. 46(8), pages 1475-1500, September.
    14. Glezakos, Constantine, 1984. "Export Instability and Economic Growth: Reply," Economic Development and Cultural Change, University of Chicago Press, vol. 32(3), pages 615-623, April.
    15. Paul Collier & P. Guillaumont & S. Guillaumont Jeanneney & Jan Willem Gunning, 1999. "Reforming Stabex," The World Economy, Wiley Blackwell, vol. 22(5), pages 669-682, July.
    16. Guillaumont, Patrick, 1987. "From export instability effects to international stabilization policies," World Development, Elsevier, vol. 15(5), pages 633-643, May.
    17. Patrick GUILLAUMONT & Sylviane GUILLAUMONT JEANNENEY & Paul COLLIER & Jan Willem GUNNING, 1997. "Rénover le Stabex," Working Papers 199723, CERDI.
    18. Moran, Cristian, 1983. "Export fluctuations and economic growth : An empirical analysis," Journal of Development Economics, Elsevier, vol. 12(1-2), pages 195-218.
    19. William Lin, 1977. "Measuring Aggregate Supply Response under Instability," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 59(5), pages 903-907.
    20. Ghura, Dhaneshwar & Grennes, Thomas J., 1993. "The real exchange rate and macroeconomic performance in Sub-Saharan Africa," Journal of Development Economics, Elsevier, vol. 42(1), pages 155-174, October.
    21. Patrick Guillaumont & Catherine Bonjean, 1991. "Effects on agricultural supply of producer price level and stability with and without goods scarcity: The case of coffee supply in Madagascar," Journal of International Development, John Wiley & Sons, Ltd., vol. 3(2), pages 115-133.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gnangnon, Sèna Kimm, 2018. "Effect of multilateral trade liberalization on foreign direct investment outflows amid structural economic vulnerability in developing countries," Research in International Business and Finance, Elsevier, vol. 45(C), pages 15-29.
    2. Patrick GUILLAUMONT, 2001. "Ouverture, vulnérabilité et développement," Working Papers 200103, CERDI.
    3. Sèna Kimm Gnangnon & Harish Iyer, 2017. "Structural Economic Vulnerability, Trade Policy and FDI Inflows," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 8(01), pages 1-35, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Patrick GUILLAUMONT, 2000. "On the Economic Vulnerability of Low Income Countries," Working Papers 200016, CERDI.
    2. Patrick Guillaumont, 2009. "An Economic Vulnerability Index: Its Design and Use for International Development Policy," Oxford Development Studies, Taylor & Francis Journals, vol. 37(3), pages 193-228.
    3. Patrick GUILLAUMONT, 2001. "Ouverture, vulnérabilité et développement," Working Papers 200103, CERDI.
    4. Patrick Guillaumont, 2010. "Assessing the Economic Vulnerability of Small Island Developing States and the Least Developed Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 46(5), pages 828-854.
    5. Jean-Louis COMBES & Patrick GUILLAUMONT, 2000. "Volatilité des prix des produits primaires, vulnérabilité et développement," Working Papers 200014, CERDI.
    6. Patrick GUILLAUMONT, 2007. "EVI and its Use. Design of an Economic Vulnerability Index and its Use for International Development Policy," Working Papers 200714, CERDI.
    7. Jean‐Louis Combes & Patrick Guillaumont, 2002. "Commodity Price Volatility, Vulnerability and Development," Development Policy Review, Overseas Development Institute, vol. 20(1), pages 25-39, March.
    8. Guillaumont, Patrick & Jeanneney, Sylviane Guillaumont & Brun, Jean-Francois, 1999. "How Instability Lowers African Growth," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 8(1), pages 87-107, March.
    9. Patrick Guillaumont, 2011. "EVI and its Use. Design of an Economic Vulnerability Index and its Use for International Development Policy," CERDI Working papers halshs-00557091, HAL.
    10. Patrick Guillaumont, 2011. "An Economic Vulnerability Index: Its Design and Use for International Development Policy," CERDI Working papers halshs-00554328, HAL.
    11. Patrick GUILLAUMONT, 2009. "Aid effectiveness for poverty reduction: macroeconomic overview and emerging issues," Working Papers P05, FERDI.
    12. Julia Cage, 2015. "Measuring Policy Performance: Can We Do Better than the World Bank?," Post-Print hal-03392964, HAL.
    13. Julia Cage, 2015. "Measuring Policy Performance: Can We Do Better than the World Bank?," SciencePo Working papers Main hal-03392964, HAL.
    14. Temple, Jonathan R.W., 2010. "Aid and Conditionality," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4415-4523, Elsevier.
    15. Dehn, Jan, 2000. "The effects on growth of commodity price uncertainty and shocks," Policy Research Working Paper Series 2455, The World Bank.
    16. repec:hal:spmain:info:hdl:2441/5su81hd0ma8soqp1nvf7852ffv is not listed on IDEAS
    17. Pierre-Emmanuel Darpeix, 2019. "Literature review on the consequences of food price spikes and price volatility," Working Papers hal-02072329, HAL.
    18. Jan Dehn, 2000. "Commodity Price Uncertainty and Shocks: Implications for Economic Growth," Economics Series Working Papers WPS/2000-10, University of Oxford, Department of Economics.
    19. Jan Willem Gunning, 2005. "Pourquoi donner de l'aide ?," Revue d’économie du développement, De Boeck Université, vol. 13(2), pages 7-50.
    20. Pierre-Emmanuel Darpeix, 2019. "Literature review on the consequences of food price spikes and price volatility," PSE Working Papers hal-02072329, HAL.
    21. Julia Cage, 2015. "Measuring Policy Performance: Can We Do Better than the World Bank?," SciencePo Working papers hal-03392964, HAL.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cdi:wpaper:115. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Vincent Mazenod (email available below). General contact details of provider: https://edirc.repec.org/data/ceauvfr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.