IDEAS home Printed from https://ideas.repec.org/p/unu/wpaper/rp2007-40.html
   My bibliography  Save this paper

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

Author

Listed:
  • Guillaumont, Patrick

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 ...

Suggested Citation

  • Guillaumont, Patrick, 2007. "Assessing the Economic Vulnerability of Small Island Developing States and the Least Developed Countries," WIDER Working Paper Series 040, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:rp2007-40
    as

    Download full text from publisher

    File URL: http://www.wider.unu.edu/sites/default/files/rp2007-40.pdf
    Download Restriction: no

    Other versions of this item:

    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. Catherine KORACHAIS & Patrick GUILLAUMONT, 2008. "When unstable, growth is less pro poor," Working Papers 200827, CERDI.
    3. Jacky Amprou & Patrick Guillaumont & Sylviane Guillaumont Jeanneney, 2007. "Aid Selectivity According to Augmented Criteria," The World Economy, Wiley Blackwell, vol. 30(5), pages 733-763, May.
    4. 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.
    5. Knudsen, Odin K. & Yotopoulos, Pan A., 1976. "A Transitory Income Approach to Export Instability," Food Research Institute Studies, Stanford University, Food Research Institute, vol. 15(1), pages 1-18.
    6. Andrew Berg & Catherine Pattillo, 1999. "Are Currency Crises Predictable? A Test," IMF Staff Papers, Palgrave Macmillan, vol. 46(2), pages 1-1.
    7. Morris Goldstein & Graciela Kaminsky & Carmen Reinhart, 2017. "Methodology and Empirical Results," World Scientific Book Chapters,in: TRADE CURRENCIES AND FINANCE, chapter 11, pages 397-436 World Scientific Publishing Co. Pte. Ltd..
    8. Patrick GUILLAUMONT & Catherine KORACHAIS & Julie SUBERVIE, 2006. "How Macroeconomic Instability Lowers Child Survival," Working Papers 200639, CERDI.
    9. Acemoglu, Daron & Johnson, Simon & Robinson, James & Thaicharoen, Yunyong, 2003. "Institutional causes, macroeconomic symptoms: volatility, crises and growth," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 49-123, January.
    10. 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.
    11. Christopher GRIGORIOU & Patrick GUILLAUMONT, 2003. "A Dynamic Child Survival Function: Natural Convergence and Economic Policy," Working Papers 200333, CERDI.
    12. Easterly, William & Kraay, Aart, 2000. "Small States, Small Problems? Income, Growth, and Volatility in Small States," World Development, Elsevier, vol. 28(11), pages 2013-2027, November.
    13. P. Guillaumont & L. Chauvet, 2001. "Aid and Performance: A Reassessment," Journal of Development Studies, Taylor & Francis Journals, vol. 37(6), pages 66-92.
    14. Robert Lensink & Oliver Morrissey, 2006. "Foreign Direct Investment: Flows, Volatility, and the Impact on Growth," Review of International Economics, Wiley Blackwell, vol. 14(3), pages 478-493, August.
    15. Julie SUBERVIE, 2006. "The impact of world price instability on agricultural supply according to several macroeconomic factors," Working Papers 200604, CERDI.
    16. Christopher L. Gilbert & Alexandra Tabova, 2005. "Can we link concessional debt service to commodity prices?," Department of Economics Working Papers 0508, Department of Economics, University of Trento, Italia.
    17. 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.
    18. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
    19. Dani Rodrik, 1998. "Why Do More Open Economies Have Bigger Governments?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 997-1032, October.
    20. Rachid LAAJAJ & Patrick GUILLAUMONT, 2006. "When instability increases the effectiveness of aid projects," Working Papers 200637, CERDI.
    21. Patrick Guillaumont, 1989. "Stratégies de développement et ouverture sur l'extérieur," African Development Review, African Development Bank, vol. 1(1), pages 40-57.
    22. J.-L Combes & P. Guillaumont & S. Guillaumont Jeanneney & P. Motel Combes, 2000. "Ouverture sur l'extérieur et instabilité des taux de croissance," Revue Française d'Économie, Programme National Persée, vol. 15(1), pages 3-33.
    23. Collier, Paul & Dollar, David, 2001. "Can the World Cut Poverty in Half? How Policy Reform and Effective Aid Can Meet International Development Goals," World Development, Elsevier, vol. 29(11), pages 1787-1802, November.
    24. Sylviane GUILLAUMONT JEANNENEY & Kangni KPODAR, 2004. "Développement financier, instabilité financière et réduction de la pauvreté," Working Papers 200429, CERDI.
    25. Alan Winters, L. & Martins, Pedro M. G., 2004. "When comparative advantage is not enough: business costs in small remote economies," World Trade Review, Cambridge University Press, vol. 3(03), pages 347-383, November.
    26. Jean-François Brun & Céline Carrère & Patrick Guillaumont & Jaime de Melo, 2015. "Has Distance Died? Evidence from a Panel Gravity Model," World Scientific Book Chapters,in: Developing Countries in the World Economy, chapter 13, pages 299-320 World Scientific Publishing Co. Pte. Ltd..
    27. Bleaney, Michael & Fielding, David, 2002. "Exchange rate regimes, inflation and output volatility in developing countries," Journal of Development Economics, Elsevier, vol. 68(1), pages 233-245, June.
    28. Richard Breen & Cecilia García-Peñalosa, 2005. "Income Inequality and Macroeconomic Volatility: An Empirical Investigation," Review of Development Economics, Wiley Blackwell, vol. 9(3), pages 380-398, August.
    29. David Dollar & Craig Burnside, 2000. "Aid, Policies, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 847-868, September.
    30. Patrick Guillaumont, 2009. "Caught in a trap. Identifying the least developed countries," Post-Print hal-00436331, HAL.
    31. Reinhart, Carmen & Goldstein, Morris & Kaminsky, Graciela, 2000. "Assessing financial vulnerability, an early warning system for emerging markets: Introduction," MPRA Paper 13629, University Library of Munich, Germany.
    32. Alexander Sarris, 2003. "Une assurance du prix des matières premières fondée sur le marché pour les pays en développement : vers une nouvelle approche," Revue d’économie du développement, De Boeck Université, vol. 11(1), pages 5-41.
    33. Sylviane Guillaumont Jeanneney & Kangni Kpodar, 2011. "Financial Development and Poverty Reduction: Can There be a Benefit without a Cost?," Journal of Development Studies, Taylor & Francis Journals, vol. 47(1), pages 143-163.
    34. Gyimah-Brempong, Kwabena, 1991. "Export Instability and Economic Growth in Sub-Saharan Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 39(4), pages 815-828, July.
    35. Adams, Richard Jr., 2004. "Economic Growth, Inequality and Poverty: Estimating the Growth Elasticity of Poverty," World Development, Elsevier, vol. 32(12), pages 1989-2014, December.
    36. Lisa CHAUVET & Patrick GUILLAUMONT & Sylviane GUILLAUMONT JEANNENEY & Pierre JACQUET & Bertrand SAVOYE, 2003. "Attenuating through Aid the Vulnerability to Price Shocks," Working Papers 200325, CERDI.
    37. Lutz, Matthias, 1994. "The effects of volatility in the terms of trade on output growth: New evidence," World Development, Elsevier, vol. 22(12), pages 1959-1975, December.
    38. Ale Bulir & A. Javier Hamann, 2003. "Aid Volatility: An Empirical Assessment," IMF Staff Papers, Palgrave Macmillan, vol. 50(1), pages 1-4.
    39. Barry P. Bosworth & Susan M. Collins, 2003. "The Empirics of Growth: An Update," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 34(2), pages 113-206.
    40. Chris Milner & Thomas Weyman-Jones, 2003. "Relative National Efficiency and Country Size: Evidence for Developing Countries," Review of Development Economics, Wiley Blackwell, vol. 7(1), pages 1-14, February.
    41. Catherine ARAUJO BONJEAN & Jean-Louis COMBES & Pascale COMBES MOTEL, 1999. "The Economic Consequences of Export Instability in Developing Countries: A Survey," Working Papers 199926, CERDI.
    42. Collier, Paul & Dollar, David, 2002. "Aid allocation and poverty reduction," European Economic Review, Elsevier, vol. 46(8), pages 1475-1500, September.
    43. Collier, Paul & Hoeffler, Anke, 2004. "Aid, policy and growth in post-conflict societies," European Economic Review, Elsevier, vol. 48(5), pages 1125-1145, October.
    44. 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.
    45. de Janvry, Alain & Sadoulet, Elisabeth, 2000. "Growth, Poverty, and Inequality in Latin America: A Causal Analysis, 1970-94," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(3), pages 267-287, September.
    46. Briguglio, Lino, 1995. "Small island developing states and their economic vulnerabilities," World Development, Elsevier, vol. 23(9), pages 1615-1632, September.
    47. Mendoza, Enrique G., 1997. "Terms-of-trade uncertainty and economic growth," Journal of Development Economics, Elsevier, vol. 54(2), pages 323-356, December.
    48. 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.
    49. Edward Miguel & Shanker Satyanath & Ernest Sergenti, 2004. "Economic Shocks and Civil Conflict: An Instrumental Variables Approach," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 725-753, August.
    50. Patrick GUILLAUMONT, 2007. "A Retrospective EVI: Methodological Aspects," Working Papers 200715, CERDI.
    51. Bleaney, Michael & Greenaway, David, 2001. "The impact of terms of trade and real exchange rate volatility on investment and growth in sub-Saharan Africa," Journal of Development Economics, Elsevier, vol. 65(2), pages 491-500, August.
    52. G. K. Helleiner, 1996. "Why Small Countries Worry: Neglected Issues in Current Analyses of the Benefits and Costs for Small Countries of Integrating with Large Ones," The World Economy, Wiley Blackwell, vol. 19(6), pages 759-764, November.
    Full references (including those not matched with items on IDEAS)

    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:unu:wpaper:rp2007-40. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mauricio Roa Grisales). General contact details of provider: http://edirc.repec.org/data/widerfi.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.