CDB vulnerability index to become the gold standard

CDB vulnerability index to become the gold standard

Crime, climate change effects now among assessment criteria

BY MIGUEL A THOMAS
Associate editor
thomasm@jamaicaobserver.com

Friday, February 21, 2020

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IN its continued thrust to mobilise financial resources from outside and within the region to advance development, the Caribbean Development Bank (CDB) has recently published its new Multidimensional Vulnerability Index (MVI), which will serve as a comprehensive evaluative tool for its borrowing member countries (BMCs).

Addressing journalists at the CDB's annual news conference at the bank headquarters in Bridgetown, Barbados, last week, Dr Justin Ram, director of economics, said the new index will provide “a more holistic view than the previous Economic Vulnerability Index, as it includes measures of social vulnerability and a climate change vulnerability component”.

For social element, the sub-index proxy indicators will be the number of murders per 100,000 population, the rate of unemployment, and the country's level of poverty.

Dr Ram acknowledged that as the countries of the region pursue home-grown economic-strengthening programmes, among the impacting variables was the growing monster of crime and violence, which could not be ignored.

He noted that most BMCs fight a growing battle with criminal activities to varying degrees which impacts the implementation of the projects approved by the bank and the rate at which success can be materialised.

“The index assists countries in determining their development priorities to build up resilience, and has the potential to broaden BMCs' access to concessional finance, regardless of income per capita,” said the CDB executive.

HAITI AND TRINIDAD

Bank documents reveal that ranking highest on the MVI is Haiti, which has a vulnerability index score that is more than double the lowest-ranking country, Trinidad and Tobago. In general, tourism-based economies appear to be more vulnerable, although commodity-based economies have unique challenges related to sharp booms, cycles, inequality, among other variables.

Dr Ram described the index as a knowledge product which helps to unmask some of the region's major development challenges and suggested that the work towards improving the quality of life for the citizens of BMCs must expand beyond looking at gross domestic product (GDP) per capita, the once-standard economic indicator of well-being.

Speaking with the Jamaica Observer after the news conference he said: “The reason that we have come up with the Multidimensional Vulnerability Index is that, besides economics… based on your scores you can identify where you want to focus to build resilience, because if we build resilience in one area, overall resilience grows.”

He acknowledged that GDP per capita does provide a good sense of how well an economy is doing, but added that: “We live in a neighbourhood here where we have visitors we give names like Dorian, for example, and they wreak a lot of havoc, and so in a matter of hours we can have situations wherein the gains that we've made over the last decade, or two decades, can be erased.”

The CDB head of economics went on to explain that the regional entity has shared the MVI model with a number of multilateral partners, such as the International Monetary Fund (IMF); the United Nations, in particular the World Bank; the Inter-American Development Bank; among others.

“We have come to the conclusion that our methodology is quite strong; perhaps there could be some tweaks…[And] we got some feedback that we could include the measure of access to medical care or the cost of medical care, and that's something we're going to look at.”

Dr Ram indicated that the United Nations has offered to work with the CDB to roll out use of the index on a global level.

“So, while we have only calculated for our borrowing member countries, we are likely to work with them and combine resources so that we can utilise the tool for most of the countries in the world. That, we think, will be quite groundbreaking, because it would show, relative to others, where the Caribbean vulnerabilities lie, and show other countries where their vulnerabilities lies, and where their priorities should be in terms of policy, investment, and security for the sustainability of society and economies.”

He explained further that, applying the index shows that among the main vulnerabilities of BMCs were also inequality, dependence on strategic imports, and export concentration.

Going forward, Dr Ram said that the bank's research will examine the benefits of equal opportunity combined with economic competitiveness; explore enhanced regional integration through factor mobility; consider how inclusivity and resilience might be undermined by crime; focus on measurement of the blue economy and the potential of marine renewable energy; and recommend innovative financing mechanisms for building resilience.


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