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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

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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

Presenter: Dr. Witter


Vulnerability trends profile selected caribbean case studies
Vulnerability: Trends & ProfileSelected Caribbean Case Studies

Presenter: Dr. Witter


Vulnerability trends and profile
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

Presenter: Dr. Witter


Vulnerability trends and profile1
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

Presenter: Dr. Witter


Vulnerability trends and profile2
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

Presenter: Dr. Witter


Vulnerability trends and profile3
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

Presenter: Dr. Witter


Vulnerability trends and profile4
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.

Presenter: Dr. Witter


Vulnerability trends and profile5
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

  • Presenter: Dr. Witter


    Vulnerability trends and profile6
    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

    Presenter: Dr. Witter


    Vulnerability trends and profile7
    Vulnerability: Trends and Profile

    • Accordingly, the index of economic vulnerability (IEV[1])used is defined as:

  • IEV = [(exposure) + (concentration) + (energy dependence) + (indebtedness)]/4,

  • where :

    [1]EVI already refers to the environmental vulnerability index

  • Presenter: Dr. Witter


    Vulnerability trends and profile8
    Vulnerability: Trends and Profile

    • exposure = (X+T+M)/GDP

    • concentration = (Leading exports +T)/(X+T)

    • 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

    Presenter: Dr. Witter


    Vulnerability trends and profile9
    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

    Presenter: Dr. Witter


    Vulnerability trends and profile10
    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.

    Presenter: Dr. Witter


    Vulnerability trends and profile11
    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.

    Presenter: Dr. Witter


    Vulnerability trends and profile12
    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.

    Presenter: Dr. Witter


    Vulnerability trends and profile13
    Vulnerability: Trends and Profile

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

    Presenter: Dr. Witter


    Vulnerability trends and profile14
    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.

    Presenter: Dr. Witter


    Vulnerability trends and profile15
    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

    Presenter: Dr. Witter


    Caribbean vulnerability indices
    Caribbean Vulnerability Indices

    Presenter: Dr. Witter


    Caribbean vulnerability indices1
    Caribbean Vulnerability Indices

    Presenter: Dr. Witter


    Caribbean vulnerability index
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index1
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index2
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index3
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index4
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index5
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index6
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index7
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index8
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index9
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index10
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index11
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index12
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index13
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index14
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index15
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index16
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index17
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index18
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


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    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index20
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index21
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index22
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index23
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index24
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index25
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index26
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Caribbean vulnerability index27
    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


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    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


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    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


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    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


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    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


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    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


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    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


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    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


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    Caribbean Vulnerability Index:

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    Caribbean Vulnerability Index:

    Presenter: Dr. Witter


    Economic vulnerability profile
    Economic Vulnerability Profile:

    THE ISLAND

    Physical size

    Location

    Demographic

    Population Distribution

    Economic Size – absolute

    Economic Size – relative

    Economic Growth

    Structure of the Economy

    THE PEOPLE

    THE ECONOMY

    Presenter: Dr. Witter


    Economic vulnerability profile1
    Economic Vulnerability Profile:

    INTERNATIONAL ECONOMIC RELATIONS

    Profile of International Trade

    Profile of International Finance

    Shocks of Natural Forces

    Shocks / Threats to Security

    Threats to Major Social Groups

    ENVIRONMENTAL RISK

    SECURITY RISK

    SOCIAL VULNERABILITY

    Presenter: Dr. Witter


    Economic vulnerability profile2
    Economic Vulnerability Profile:

    • Profile

    • Profile 2

    Presenter: Dr. Witter


    Jamaica vulnerability profile
    Jamaica Vulnerability Profile

    • Profile

    Presenter: Dr. Witter


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