Economic vulnerability is detrimental to development, particularly in small countries, because economic growth and poverty reduction might be clearly and durably reduced by shocks. The economic vulnerability of a country is the risk of a (poor) country seeing its development hampered by natural and external shocks. Vulnerability can be seen as the result of three components: (i) the size and frequency of the exogenous shocks, (ii) the exposure to shocks and (iii) the capacity to react to shocks, or the resilience. The resilience mainly depends on present policy, what is not the case of the two other components. Structural vulnerability essentially results from the first two components.
