Economic vulnerability is designed as the risk for a country to be durably affected by exogenous recurrent shocks. There is increasing evidence that the vulnerability and instability of countries are obstacles to their economic growth, poverty reduction and durable development. When it is structural, vulnerability does not depend on the present will of countries, while it may influence its policy. Structural economic vulnerability makes development opportunities unequal: as a structural handicap to development, mainly affecting Least Developed Countries, it is a major source of international inequity. This holds not only for economic vulnerability with regard to growth prospects, but also for the physical vulnerability to climate change with regard to durable development. Thus there is an equity rationale to take into account structural vulnerabilities in the design of international policies, in particular for the allocation of international resources.
For the design of such policies, it is important to have a clear, simple and relevant measure of structural economic vulnerability and of the physical vulnerability to climate change as well. It will reinforce the ground for taking them into consideration respectively for the allocation of ODA and for the allocation of adaptation resources. At the same time it will enlighten how structural vulnerability can be taken into account in the on-going design of the post-2015 development goals.
Relevant measures of structural vulnerability should include an assessment of the likely size of the shocks and of the exposure to these shocks, using components not dependent on current policies. A special attention will be given to the Economic Vulnerability Index (EVI) used at the United Nations for the identification of the Least Developed Countries and to the Physical Vulnerability to Climate Change Index, set up at Ferdi, and to their possibly needed modifications.
The session addressed the following issues: how structural economic vulnerability can be best measured, how it impacts the quality of policies, how it can be used as an equity criterion for the allocation of aid, how by the same way a physical vulnerability to climate change can be measured and used for the allocation of adaptation resources, and what are the implications of these structural vulnerabilities for the post-2015 agenda.
The session was chaired by Patrick Guillaumont, Professeur émérite at Université d’Auvergne (Cerdi), and Président of Ferdi. Main speakers included (besides the chair): Patrick Guillaumont, Professeur émérite and President of Ferdi; Mark McGillivray, Research Professor of International Development at Deakin University's Alfred Deakin Research Institute (ADRI), Melbourne; Vinod Thomas, Director-General of Independent Evaluation at the Asian Development Bank; Désiré Ventacachellum, Director of Operations, African Development Bank. Experts from several other institutions have also taken part in the discussion.