Transcript Strengths and Weaknesses of Small Islands This paper

THE
VULNERABILITY
INDEX
Lino Briguglio
University of Malta
Inter-regional Preparatory Meeting for the
World Summit for Sustainable Development
Singapore, 7-11 January 2002
VULNERABILITY OF SIDS
ECONOMIC VULNERABILITY stems from a
number of inherent characteristics of SIDS:

The small size of SIDS, which limits their ability
to reap the benefits of economies of scale and
constrains production possibilities.
 A high degree of economic openness rendering
these states particularly susceptible to economic
conditions in the rest of the world
ECONOMICVULNERABILITY (Cont)
 Dependence on a narrow range of exports,
giving rise to the usual risks associated with
lack of diversification.
 Dependence on imports, in particular
energy and industrial supplies, exacerbated
by limited import substitution possibilities.
 Insularity, peripherality and remoteness,
leading to high transport costs and
marginalization.
ENVIRONMENTALVULNERABILITY
Small island states tend also to be
environmentally vulnerable, mainly due to:

Limited assimilative and carrying
capacity, leading to problems associated with
waste management, water storage and other
factors associated with small territorial size.

A relatively large coastal zone, in
relation to the land mass, making these states
especially prone to exposure to waves, winds,
and erosion.
ENVIRONMENTALVULNERABILITY (Cont)

Fragile ecosystems, because of low
resistance to outside influences.

A proneness to natural disasters, including
earthquakes, volcanic eruptions, cyclones,
hurricanes, floods, tidal waves and others.

A relatively high proportion of land which
could be affected by sea level rise.

Economic development has relatively
large impacts on the environment.
VULNERABILITY & ECONOMIC SUCCESS
In spite of their economic and environmental
vulnerability, many small states do not register
very low GNP per capita.
This gives the impression of economic strength,
and masks the fact that SIDS are fragile and
dependent to a high degree on conditions outside
the country’s control.
(There are, of course, a number of SIDS which
have low GNP per capita and are classified as
Least Developed Countries).
THE ORIGINS OF THE INDEX
This has led to the development of an
economic vulnerability index, the main
objective being to highlight the underlying
economic and environmental fragility of
small states.
The computation of a Vulnerability Index
was first proposed by the present author in
1985 and was produced for the first time in
1992 for UNCTAD.
METHODS
There are three basic methods for computing
a vulnerability index:
 Using variables (the component of the index)
which render a country as vulnerable. Since these
variables are measured in different ways,
summing these variables requires standardisation
of the observations (Briguglio, Chander, Wells,
Crowards, CDP)
 Mapping on a categorical scale (1-7) and
taking an average (SOPAC)
 Regression method and using predicted values
of the dependent variable (Comm. Secretariat.)
COMPONENTS OF THE INDEX
The vulnerability indices developed so far
differ also in terms of complexity.
The economic vulnerability indices
generally include a relatively small number
of variables, often limited to three to five.
One reason for this is that many economic
variables are correlated with each other
and one variable could be used to represent
others.
COMPONENTS OF THE ECONOMIC
VULNERABLE INDEX
The most frequent variables used in the
economic vulnerability indices relate to:
• Economic openness
• Export concentration
• Dependence on imports of energy
• Peripherality
THE ECONOMIC RESILIENCE COMPONENT
Some indices incorporate a resilience component
to allow for the ability of countries to absorb,
cope or bounce back:
Commonwealth Secretariat uses a GDP variable,
assuming that the larger the GDP the better is the
ability to cope
Briguglio uses a GDP per capita index, assuming
that the ability to cope needs to be deflated by
population size .
ECONOMICVULNERABILTY INDEX
PROPOSED BY THE PRESENT AUTHOR
Components:
Vulnerability Variables:
• Economic openness [(X+M)/GDP]
• Export concentration
• Dependence on imports of energy
• Peripherality
Resilience Variable:
GDP per capita
ECONOMICVULNERABILITY INDEX
PROPOSED BY THE PRESENT AUTHOR
Variables used as component of the index are
measured using a standardisation procedure to
permit summing of the components:
Xi – Min (X) / Max (X) – Min (X)
where:
• Xi is the observed value of component X
• Min (X) is the minimum value of component X; and
• Max(X) is the maximum value
The result will be between 0 and 1, where 1 will represent
the highest incidence and 0 the lowest incidence on a
standardised scale.
An equal weighting scheme is used for summing the
components.
THEVULNERABILITY INDEX OF THE CDP
FOR LDCs
The Committee for Development Policy (of the UN
ECOSOC) uses the following variables for its
Economic Vulnerability Index:
• Export Concentration
• Instability of Agricultural Production
• Instability of Exports
• Population size
• Share of Manufacturing and Modern
Services.
The variables are standardised as just described and
summation is through an equal weighting scheme.
THEVULNERABILITY INDEX OF THE
COMMONWEALTH SECRETARIAT
The Commonwealth Secretariat index focuses on
income volatility and attempts to predict
vulnerability using a regression method. The
method assumed that vulnerability is represented
by income volatility and that the latter is a
function of a number of “vulnerability” variables.
The estimated coefficients are taken as the
weights for summing the components. In this case
the variables do not need to be standardised.
THEVULNERABILITY INDEX OF THE
COMMONWEALTH SECRETARIAT
The method involves estimating an equation of
the type:
V =  (X1) + b (X2) + c (X3)
where:
• X1, X2 and X3 represent the individual components of
the index,
• ,b and c are estimated coefficients using weighted
least squares method; and
• V is the predicted volatility indicator, assumed to
capture vulnerability
THEVULNERABILITY INDEX OF THE
COMMONWEALTH SECRETARIAT
All Economic Vulnerability Indices arrive at the
conclusion that small states (most of which are
SIDS) are among the most vulnerable countries.
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.
THE EVI PROPOSED BY SOPAC
The Environmental Vulnerability Index
(EVI) developed by Kaly et al. utilized a
large number of variables (49 in all) since, as
argued by the authors, a large number of
indicators are required for complex
ecological systems.
Each indicator was measured along a 7
point scale, where 7 represented the highest
incidence and 1 the lowest.
COMPONENTS OF THE EVI
• A sub-set of indicators are used to measure the
Level of risks (or pressures) which act on the
environment forming the risk exposure subindex (REI)
• Another sub-set of indicators are used to
measure Intrinsic resilience of the environment to
risks (IRI)
• A third sub-set are used to measure Extrinsic
vulnerability, forming the environmental
degradation sub-index (EDI) which describes the
ecological integrity
COMBINING THE ECONOMIC AND
ENVIRONMENTALVULNERABILITY
To date there has not been a serious attempt to
create a super-composite index which
combines environmental and economic
vulnerability.
The CDP however claim that the fluctuations in
agriculture variable may capture environmental
factors in the Vulnerability Index.
BENEFITS OF THE INDEX
There are at least two 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
WEAKNESSES
There are a number of weaknesses in the currently
developed Vulnerability Indices. These weaknesses
are principally associated with:
• the subjectivity in the choice of variables
• absence of data for some countries
• the method of measurement (due to e.g.
inconsistent measurement across countries)
• the weighting and averaging procedure
THANK YOU FOR
YOUR ATTENTION
comments and questions welcome