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Assessing the Economic Vulnerability of Small Island Developing States and the Least Developed Countries

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  • Patrick Guillaumont
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    Abstract

    Macro vulnerability of the small island developing states (SIDS) as well as of least developed countries (LDCs) has been an increasing concern for the international community. This concern has led to the creation of the economic vulnerability index (EVI) in order to assess comparatively the degree of structural economic vulnerability of countries. Structural vulnerability results mainly from natural or external shocks faced by countries, and their exposure to these shocks. General vulnerability, on the other hand, depends on the resilience of the country which is determined mainly by policy. We first explain how vulnerability affects growth and development, particularly in small developing countries, by considering the consequences of the size of shocks, the exposure to shocks and the consequences of resilience. The channels of transmission are also explored in an attempt to explain how instability slows down poverty reduction not only directly but also through lower growth. We also examine how the EVI, as a synthetic measure of structural vulnerability, has been designed and how it can be used to compare. [Research Paper No. 2007/40]

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    Bibliographic Info

    Paper provided by eSocialSciences in its series Working Papers with number id:2625.

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    Date of creation: Jun 2010
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    Handle: RePEc:ess:wpaper:id:2625

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    Keywords: vulnerability; instability; shocks; growth handicaps; least developed countries; small island developing states; aid allocation;

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    Cited by:
    1. Léonce Ndikumana, 2013. "Applying Evaluation to Development and Aid: Can Evaluation Bridge the Micro-macro Gaps in Aid Effectiveness?," Published Studies article-leonce-ndikumana-, Political Economy Research Institute, University of Massachusetts at Amherst.
    2. Anuradha Seth & Amr Ragab, 2012. "Macroeconomic Vulnerability in Developing Countries: Approaches and Issues," One Pager 152, International Policy Centre for Inclusive Growth.
    3. Patrick Guillaumont, 2011. "The concept of structural economic vulnerability and its relevance for the identification of the Least Developed Countries and other purposes," CDP Background Papers 012, United Nations, Department of Economics and Social Affairs.
    4. Montalbano, Pierluigi, 2011. "Trade Openness and Developing Countries' Vulnerability: Concepts, Misconceptions, and Directions for Research," World Development, Elsevier, vol. 39(9), pages 1489-1502, September.
    5. Anuradha Seth & Amr Ragab, 2012. "Macroeconomic Vulnerability in Developing Countries: Approaches and Issues," Working Papers 94, International Policy Centre for Inclusive Growth.
    6. Joël CARIOLLE, 2012. "Measuring macroeconomic volatility - Applications to export revenue data, 1970-2005," Working Papers I14, FERDI.
    7. Joël CARIOLLE, 2012. "Mesurer l’instabilité macroéconomique - Applications aux données de recettes d’exportation, 1970-2005," Working Papers I14, FERDI.
    8. Angelucci, Federica & Conforti, Piero, 2010. "Risk management and finance along value chains of Small Island Developing States. Evidence from the Caribbean and the Pacific," Food Policy, Elsevier, vol. 35(6), pages 565-575, December.

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