In response to a need expressed by the UN General Assembly, an Economic Vulnerability index (EVI) has been defined by the Committee for Development Policy. The present paper, which refers to this ...index, first examines how a structural EVI can be designed for low-income countries in particular. It recapitulates the conceptual and empirical grounds of the index, considers the structure of the present EVI, its sensitivity to methodological choices with respect to averaging, as well as possible improvements in this regard, and briefly compares the levels and trends of EVI in various country groups, using a new database from a "retrospective EVI". The paper examines how the EVI can be used for international development policy, underlining two main purposes. The first-the purpose for which the EVI was initially designed-is the identification of the least-developed countries (LDCs) that are eligible to receive some preferential treatment in aid and trade matters. The EVI, in addition to income per capita and human capital, is one of three complementary criteria a country needs to meet in order to be designated as an LDC, and consequently it cannot be the sole criterion for countries wishing to avoid graduating from the LDC list. Second, the EVI can be used, in addition to other traditional measures, as a criterion for aid allocation between developing countries. It is argued that such an inclusion is legitimate for reasons of both effectiveness and equity. The two purposes are presented as complementary.
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 has led to the ...design of an economic vulnerability index (EVI) to assess the structural economic vulnerability resulting from natural or external shocks. We first explain how vulnerability affects growth, development and poverty reduction, particularly in small developing countries. We then examine how the EVI has been designed and how it can be used to compare SIDS and LDCs. We argue that EVI is a relevant tool not only for identification of LDCs, but also for geographical aid allocation to favour vulnerable countries, including LDCs and SIDS, even though not all SIDS qualify as LDCs.
La politique de lutte contre le COVID-19 menée au Nord par confinement a eu pour effet de transférer au Sud la surmortalité imputable au virus ainsi évitée, en raison (i) de la récession majeure que ...cette politique a entraînée, (ii) de sa transmission au Sud, et (iii) de la surmortalité que cette récession au Sud a entraînée. Un modèle simple illustre les trois étapes de ce transfert de surmortalité et suggère que la surmortalité ainsi induite par la récession en Afrique est beaucoup plus importante que celle qui est directement due à l’épidémie de COVID-19.
Recent years have seen a sharp increase in the production of indices of vulnerability to climate change. Most of these indices of vulnerability to climate change have been primarily used for ...awareness-raising purposes rather than for guiding international policy. The Physical Vulnerability to Climate Change Index (PVCCI) proposed in this paper has been designed as an index of exogenous vulnerability, not influenced by the present policy of the countries concerned. As such it can be used as a criterion for guiding the international allocation of concessional resources (in particular those devoted to adaptation), as well as for the identification of the countries that are most vulnerable for structural or physical reasons. The index has been calculated for 191 countries. LDCs, SIDS, and African countries have a higher average score. However, there is a wide disparity in PVCCI scores within these three groups of countries, implying that a country-by-country allocation of resources should be used rather than an allocation by country group. The findings appear to be robust after comparison of various options.
The COVID-19 spread very quickly around the world following its discovery in China, in December 2019. Lockdowns implemented in China and the Global North to control the propagation of the virus and ...to save human lives have resulted in a global recession. The transmission of the recessionary effects from the Global North to the Global South is reflected in the decline in sub-Saharan Africa's (SSA) GDP and the associated increase in poverty. The purpose of this paper is to illustrate how the recession induced in China and the Global North by COVID-19 lockdowns may have had indirect effects on SSA mortality that are higher than those directly attributed to the pandemic itself. Our methodology relies on a three-step relationship: (i) the impact of lockdowns on the recession in the North, (ii) the impact of the recession in the North on income in SSA countries, and (iii) the impact of a decline in income on mortality in SSA. We show that COVID-19-induced lockdowns in the Global North, through the severe recessions they induced in the Global South, resulted in the transfer of between 538,000 and 679,000 deaths in one year to SSA, including the deaths of 140,000 to 177,000 children aged 0-5 years. This corresponds to a 6-7% increase in the crude death rate and a 5-6% increase in under-5 mortality. These figures are much higher than the number of deaths directly attributable to COVID-19 in SSA. Thus, policymakers must not lose sight of the indirect excess mortality caused by global economic recession triggered by the pandemic. Our results reveal the need to increase the resilience of SSA countries to exogenous shocks, including COVID-19, which, in addition to increasing poverty, may induce excessive mortality due to the high sensitivity of mortality in SSA countries to economic recession.
Developing country performance with respect to economic policies and institutional behavior is a common criterion for the allocation of aid among recipient countries. This paper examines how ...performance is used, arguing that performance is too narrowly defined. A more appropriate definition is one that controls for the economic vulnerability and human capital of developing countries. Econometric analysis of cross-section and panel data is presented that supports this contention. The paper also contends that performance and exogenous economic shocks are likely to be pro-cyclical. This implies a double punishment when aid is allocated according to performance. Evidence of such punishment is also provided. The paper concludes by arguing that economic vulnerability and human capital variables should augment performance measures in aid allocation decision-making.
This paper considers why and how the Performance Based Allocation (PBA) used in multilateral development banks and in particular at IDA, could be improved by taking the structural handicaps of ...eligible countries into account. The PBA relies on a debatable definition of performance. It does not meet the equity concern raised by the existence of structural handicaps to growth. It neglects the lessons of the aid effectiveness literature. Finally, it suffers from some opacity. We show how it is possible to increase the share of specific groups of countries, such as Sub-Saharan Africa or post-conflict states, in a transparent manner.
In previous papers the authors have argued that aid is likely to mitigate the negative effects of external shocks on economic growth (i.e. that aid is more effective in countries which are more ...vulnerable to external shocks). Recently an important debate has emerged about the possible negative effects of aid volatility itself. However, the cushioning effect of aid may involve some volatility in aid flows, which then is not necessarily negative for growth. In this paper the authors examine to what extent the time profile of aid disbursements may contribute to an increase or a decrease of aid effectiveness. They first show that aid, even if volatile, is not clearly as pro‐cyclical as is often argued, and, even if pro‐cyclical, is not necessarily destabilizing. They measure aid volatility by several methods and assess pro‐cyclicality of aid with respect to exports, thus departing from previous literature, which usually assess pro‐cyclicality of aid with respect to national income or fiscal receipts. The stabilizing/destabilizing nature of aid is measured by the difference in the volatility of exports and the volatility of the aid plus export flows. Then, in order to take into account the diversity of shocks to which aid can respond, they consider the effect of aid on income volatility and again find that aid is making growth more stable, while its volatility reduces this effect. They finally show through growth regressions that the higher effectiveness of aid in vulnerable countries is to a large extent due to its stabilizing effect.
The Economic Vulnerability Index (EVI) is a well-recognised measure of the structural vulnerability of developing countries and is regularly used and published by the United Nations for cross-country ...comparison purposes, primarily to review the list of Least Developed Countries (LDCs). However, due to the revisions in methodology occurring over time, the official EVI cannot be used to assess the changes in vulnerability. In this paper, we use two retrospective series of the EVI, based on constant definitions. The real change in vulnerability is thus isolated from the impact of revisions in the design of the index, allowing comparison of the evolution of LDCs and non-LDCs. The implications of the revisions in the EVI design are then discussed.
PDF
