Presentation to the meeting,

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• Presentation to the meeting,
• The vulnerability of SIDS
• Enhancing resilience the role of the private
  sector, civil society and trade in the
  sustainable development of SIDS
• Convened by UWICED / UNDP in Dominica
• September 29, 2003 October 3, 2003
• Presented by Dr. Michael Witter
• UWI, Mona
• Assisted by Ms. Terry-Ann Miller
• UWI, Mona

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Vulnerability Trends ProfileSelected
Caribbean Case Studies
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Vulnerability Trends and Profile

• Background to the study
• Caricom project to develop a vulnerability
  profile for SIDS
• Tracking economic vulnerability as an essential
  element in the preparation of SIDS for Mauritius
• Development of customized indices for tracking
  the impact of policy on vulnerability as a
  management tool for individual SIDS

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Vulnerability Trends and Profile

• Over view of the presentation
• Definition of the index used and the rationale
• The challenges of the availability of data and
  the accessing of that data
• Estimates of the index of economic vulnerability
  in the last decade for 6 Caribbean SIDS
• Vulnerability profile template for SIDS

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Vulnerability Trends and Profile

• Definition of the Index used in these estimates
• Four indicators have been used to capture
• the openness of the economy exposure as
  indicated by the sum of exports of goods and
  tourism and imports as a proportion to GDP.
  Because of the dominance of tourism in the hard
  currency earnings of several Caribbean SIDS, it
  seemed necessary to include tourism in indicating
  the exposure of these economies to shocks
  emanating from the international economy

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Vulnerability Trends and Profile

• the concentration of risk among the two of three
  leading export industries, including tourism, as
  indicated by the share of the two or three
  principal (largest) foreign exchange earners in
  total earnings from the export of goods plus
  tourism
• dependence on imported energy as indicated by
  the share of imported energy in total energy
  consumption. There is a difficulty with this
  indicator for countries, like Trinidad and
  Tobago, that import petroleum for processing and
  re-export as petroleum-based products

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Vulnerability Trends and Profile

• external indebtedness as indicated by the
  proportion of external debt to the GDP. We have
  experimented, in the case of Jamaica, with the
  inclusion of the internal debt as an indicator of
  indebtedness because of the impossibility of
  separating the external from the internal debt
  where the capital market has been liberalized.
  Even conceptual distinction between external and
  internal debt is difficult in a country like
  Jamaica. For the purposes of this exercise we
  have not included the internal debt.

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Vulnerability Trends and Profile

• Weighting of the indicators
• We have adopted equal weights for the indicators
  in constructing the index because
• Ultimately any weighting system entails values
  judgment as to the relative importance of each of
  the component indicators, and we have nor reason
  to believe that any indicator is more important
  than any of the other chosen indicators

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Vulnerability Trends and Profile

• Experiments with different weighting systems have
  not shown any significant difference in the
  estimated index except where highly unequal
  weights, that cannot be justified, are used
• Normalization, following Briguglio, so that all
  the numbers are scaled down to lie between 0 and
  1

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Vulnerability Trends and Profile

• Accordingly, the index of economic vulnerability
  (IEV1) used is defined as
• IEV (exposure) (concentration) (energy
  dependence) (indebtedness)/4,
• where
• 1 EVI already refers to the environmental
  vulnerability index

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Vulnerability Trends and Profile

• exposure (XTM)/GDP
• concentration (Leading exports T)/(XT)
• energy dependence (Petroleum imports)/(total
  energy consumption)
• indebtedness External debt/GDP
• X total exports of goods
• M total imports of goods
• T gross earnings from Tourism

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Vulnerability Trends and Profile

• The estimates of the IEV for 6 Caribbean SIDS
  Antigua, Barbados, Dominica, Jamaica, St. Lucia,
  Trinidad and Tobago are shown in the following
  graphs

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Vulnerability Trends and Profile

• Singapore Contradiction/Paradox
• Briguglio has pointed to Singapore as the epitome
  of a high performance economy with high economic
  vulnerability dependent as it is on international
  markets.

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Vulnerability Trends and Profile

• Perhaps, it is really an apparent contradiction
  a paradox since export led growth that entails
  increased dependency on a narrow range of
  industries and/or a narrow range of markets
  necessarily leads to very high risks associated
  with those industries and markets.

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Vulnerability Trends and Profile

• Conversely, the collapse of traditional export
  markets without replacement by new industries
  leads to a decline in openness, and hence a
  decline in the risks emanating from the
  international economy, and therefore a decline in
  vulnerability.

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Vulnerability Trends and Profile

• In summary, growth without diversification
  increases economic vulnerability, and economic
  vulnerability will decline as the trade sector of
  economies contracts.

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Vulnerability Trends and Profile

• Of course, in the second case the decline in
  openness if GDP is sustained by debt or
  short-term financial flows, risks due to sudden
  changes in international credit accessibility,
  and hence the economic vulnerability will
  increase. Most likely, social vulnerability will
  increase with unemployment, poverty, migration of
  skilled persons, and other factors that
  contribute to social instability, such as the
  trade in illegal drugs.

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Vulnerability Trends and Profile

• Resilience comes with growth that is
• led by a diversified basket of goods and services
  for export
• accompanied by a relative decline in the import
  dependence the so-called import coefficient of
  the GDP which in turn requires more intensive
  utilization of domestic resources

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Caribbean Vulnerability Indices
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Caribbean Vulnerability Indices
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Caribbean Vulnerability Index
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Economic Vulnerability Profile

• Physical size
• Location
• Demographic
• Population Distribution
• Economic Size absolute
• Economic Size relative
• Economic Growth
• Structure of the Economy

THE ISLAND
THE PEOPLE
THE ECONOMY
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Economic Vulnerability Profile

• Profile of International Trade
• Profile of International Finance
• Shocks of Natural Forces
• Shocks / Threats to Security
• Threats to Major Social Groups

INTERNATIONAL ECONOMIC RELATIONS
ENVIRONMENTAL RISK
SECURITY RISK
SOCIAL VULNERABILITY
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Economic Vulnerability Profile

• Profile
• Profile 2

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Jamaica Vulnerability Profile

• Profile