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THE ECONOMIC VULNERABILITY INDEX AND SMALL ISLAND

DEVELOPING STATESA REVIEW OF CONCEPTUAL

AND METHODOLOGICAL ISSUES

Lino BriguglioUniversity of Malta

Prepared for the Caribbean Regional Preparatory Meeting to Review the Implementation of the Barbados Programme of Action for the Sustainable Development of Small Island Developing States

Port of Spain, Trinidad and Tobago, 6-10 October 2003

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ECONOMIC VULNERABILITY OF SIDS

The need for IndicatorsIt is increasingly being realised that policy and decision-making require indices to succinctly summarise tendencies and trends in the variables under consideration. The advantages associated with such indices are numerous, but the most important advantage would seem to be that these can be used to represent complex phenomena in a format which permits easy comparison over time, or across subjects.

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VULNERABILITY IS MULTI-DIMENSIONAL

Vulnerability is multi-dimensional

Economic Vulnerability Environmental Vulnerability Social Vulnerability Trade Vulnerability Climate Change Vulnerability Disaster Vulnerability

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VULNERABILITY IS NOT THE SAME AS POVERTY

When measuring vulnerability we are not measuring poverty. We are measuring exposure to external forces outside one’s control. However poverty would intensify the drawbacks of vulnerability.

The “Singapore Paradox”. Singapore is not a poor country but it is an inherently vulnerable country. It has built its resilience as a result of deliberate policy.

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ECONOMIC VULNERABILITY OF SIDS

Economic vulnerability stems from a number of inherent characteristics of SIDS:

A high degree of economic openness rendering these states particularly susceptible to economic conditions in the rest of the world

Dependence on a narrow range of exports, giving rise to risks associated with lack of diversification.

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ECONOMIC VULNERABILITY (Cont)

Dependence on strategic imports, in particular energy and industrial supplies, exacerbated by limited import substitution possibilities.

Insularity, peripherality and remoteness, leading to high transport costs and marginalization.

Note:All these features arise from small size and insularity which are inherent features of SIDS

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ECONOMIC VULNERABILITY OF SIDS HAS BEEN PROVEN

That SIDS are more economically vulnerable than other group of countries has been proven.

Past studies which cover all countries of the world include:

Briguglio (1992, 1995, 1997, 2003)Commonwealth Secretariat (1996, 1998, 2000)Crowards (1999, 2000)

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VULNERABILITY OF SIDS HAS BEEN PROVEN (cont)

At the AIMS Cape Verde preparatory regional meeting, held in September 2003, it was resolved that the economic vulnerability of SIDS has been proven.

An expert group meeting held at the United Nations Headquarters in December 1997, after reviewing the vulnerability indices produced until then, concluded that SIDS, tend to more vulnerable as a group than other groups of countries.

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VULNERABILITY OF SIDS HAS BEEN PROVEN (cont)

So even if the Environmental Vulnerability Index and the Social Vulnerability Index are not completed by August 2004, it should not be concluded that the case for SIDS vulnerability will not have been made.

The work carried out so far clearly and rigorously shows that SIDS are economically vulnerable.

Hopefully after the completion of the EVI and the SVI, the results will reinforce the findings of the Economic Vulnerability Index

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VULNERABILITY AND RESILIENCE 

When discussing vulnerability, the issue of resilience often crops up. This term refers to the ability of an affected subject to recover quickly from a damaging impact.

Resilience, as defined here, is also associated with the coping ability of the affected subject, with regard to vulnerability. It may be associated also with adaptation.  

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VULNERABILITY AND RESILIENCE (Cont)  Recently, there has been considerable debate on the issue of building resilience in SIDS. This issue is important because it carries the message that SIDS should not be complacent, even if inherently vulnerable. In other words they should adopt measures to step up economic, environmental and social resilience.

In addition, the discussion on resilience sheds light as to why a number of vulnerable SIDS have managed to do economically do well in spite of (and not because of) their economic vulnerability. 

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VULNERABILITY AND RESILIENCE (Cont)  Briguglio and Galea (2003) constructed an index, which incorporates an economic resilience component, calling it EVIAR (Economic Vulnerability Index Adjusted for Resilience).

The EVIAR helps explain the “Singapore Paradox” already referred to above, namely that we can have inherently vulnerable countries, that mostly though suitable policies, have succeeded in strengthening their economic resilience, and overcoming their vulnerability.

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A METHOLOLOGICAL NOTE  The vulnerability index should include components which relate to inherent features that render countries vulnerable to forces outside the control.

Being inheret, such features will not change significantly with policy changes.

Thus openness, export concentration, dependence on strategic imports and peripherality are not policy-dependent features.

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A METHOLOLOGICAL NOTE (Cont)

 These inherent vulnerability features should not therefore be associated with bad governance.In other words, it cannot be argued that SIDS are vulnerable because of past mistakes.

Measures to cope with or withstand or adapt to vulnerability are responsive to policy and these can be grouped under the heading of “building resilience”.

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A METHOLOLOGICAL NOTE (Cont)

 An example from the natural disaster field will explain this methodological approach:

A disaster such as an earthquake is an event about which nothing much can be done, policy-wise. That is we cannot have a policy to stop earthquakes.

But we can have a policy to strengthen resilience against earthquakes, such as early warning systems, social preparedness, suitable construction codes, evacuation procedures, and social education.

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A METHOLOLOGICAL NOTE (Cont)

 This distinction between inherent vulnerability and policy-responsive resilience permits one to make the following arguments:

“…SIDS are inherently vulnerable, and nothing much can be done about that reality. However SIDS should be helped to take measures to become more resilient and become better able to cope with vulnerability.”

“Because of their inherent vulnerability, which cannot be attributed to bad governance, SIDS deserve to be given special status”.

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BENEFITS OF THE VULNERABILITY INDEX  There are many benefits associated with the production of a Vulnerability Index:  The index can draw attention to the issue of economic and environmental vulnerability of SIDS, LDCs and other vulnerable countries

The index presents a single-value measure of vulnerability based on meaningful criteria and this can be considered for the allocation of financial and technical assistance or for assigning special status to vulnerable countries

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BENEFITS OF THE INDEX (cont)  The index has a number of additional benefits:

It can support decision-making and can be useful for setting targets and establish standards, It can be used to monitor and evaluate developments and to provide quantitative estimates. It can help to disseminate information on the issue being investigated, namely vulnerability. It helps to focus the discussion, avoiding irrelevant digressions, given that the components have to be narrowly defined for quantification. Given that a number of components are involved, the index can promote the idea of integrated action.

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DESIRABLE ATTRIBUTES OF AN INDEX If the index is to receive support and if it is to be operational, it has to satisfy a number of criteria: 

Simplicity. One of the advantages of simplicity is ease of comprehension by decision-takers and other users of the index. It also permits replication by third parties for evaluation and verification. Affordability. This criterion is related to the “simplicity” criterion. Data must be relatively easy to obtain and to process. Preferably it should be collected as a matter of routine in line with the information required for the management of a country.

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DESIRABLE ATTRIBUTES (Cont)  Suitability for international and temporal comparisons. The index of the type we are discussing in this paper (i.e. developed for the purpose of comparing scores across countries) must be based on variables which are measured in a homogenous manner internationally and temporally. Transparency. The index should be verifiable and reproducible by persons other than the original producer of that indicator. This will be essential for validation, evaluation and quality control purposes. This requires that the methodology used should be clearly explained by those constructing the index.

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CONCLUSION

As stated, the Economic Vulnerability Indices produced so far indicate clearly that SIDS tend to be more economically vulnerable than other groups of countries.

Understanding and measuring vulnerability should therefore be a priority for all SIDS, and should be rigorously carried out, in line with the criteria just listed, particularly transparency.

In addition, the building of resilience against vulnerability should take centre stage in the sustainable development strategy of such states.

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THANK YOU FOR YOUR ATTENTION