Reviewing Composite Vulnerability and Resilience Indexes: A Sustainable Approach and Application

Highlights

• We analyze composite vulnerability–resilience indexes in development economics.

• A hierarchical multimetric index is provided as a scoreboard for sustainability.

• By mapping vulnerability–resilience worldwide, policy recommendations are provided.

• Both vulnerability and resilience are policy-responsive.

• There is no determinism for a country to remain vulnerable or resilient.

Summary

Vulnerability–resilience indexes fail to grasp all dimensions of sustainability, whereas sustainable development has gained momentum. We fill this gap with a hierarchical multimetric composite index (Net Vulnerability Resilience Index: NVRI) whose robustness relies on a mathematical algorithm based on graph theory. A worldwide application shows that (i) both vulnerability and resilience are policy-responsive and that (ii) there is no determinism for a country to remain vulnerable or resilient. The NVRI enables us to identify a country’s strengths and weaknesses and determine the policy orientations that should be implemented to achieve sustainability.

Introduction

According to the literature, there is a general consensus that vulnerability impedes development (Atkins et al., 2000, Briguglio, 1995, Briguglio et al., 2009, United Nations, 2008). A country’s vulnerability is usually defined by its degree of exposure to exogenous hazards – natural catastrophes and/or economic shocks (e.g., climate events, international trade instability, and market price volatility) – whereas resilience describes a country’s ability to recover from a shock (Adrianto and Matsuda, 2004, Briguglio, 1995, Dabla-Norris and Bal Gündüz, 2014, Guillaumont, 2009, Guillaumont, 2010, Guillaumont and Wagner, 2013, Rose and Krausmann, 2013). In recent decades, several composite indexes have emerged to quantify vulnerability and resilience (VR) on a macro scale (among others, Adrianto and Matsuda, 2004, Atkins et al., 2000, Briguglio, 1995, Briguglio et al., 2009, Guillaumont, 2009, Guillaumont, 2010, Turvey, 2007, Wells, 1997). More specifically, these indexes particularly focus on growth descriptors to characterize a country’s performance, whereas sustainable development has gained momentum. This conception of building composite indexes raises two issues:

• Though most of these indexes claim to stress the economic dimension of VR, they could be interpreted and/or expanded upon from a sustainable development perspective. Nevertheless, an in-depth analysis reveals that they do not simultaneously cover all of the dimensions of sustainability. Hence, an explicit interpretation of VR in terms of sustainability should be stressed.

• The multiple variables and computation methods used to build composite VR indexes lead to the question of whether there is a minimum set of variables that consistently describes the studied phenomenon. As a result, reducing the number of variables to the greatest extent possible is a crucial issue and calls for finding efficient measurement procedures.

To address these two issues, a mathematical method suggests a hierarchical multimetric VR index (NVRI) from a sustainable development perspective (Bates, Angeon, & Ainouche, 2014). The soundness of this method relies on a mathematical algorithm based on graph theory that proves the paramount importance of jointly grasping the different dimensions of sustainability to build a holistic VR index. In this regard, this paper calls for renewing the art of computing composite VR indexes and advocates for reassessing the current state of countries’ VR. The NVRI is then applied to a worldwide sample over the last decade to rank and compare countries’ performance. Policy implications that complement international organizations’ emphasis on sustainable development objectives are provided. They facilitate a high level of sustained and inclusive growth (World Bank, 2008) as a way for countries to mitigate, adapt to, and recover from shocks in a manner that reduces their vulnerability and consequently augments their resilience.

Thus, more evidence is given on the credibility and legitimacy of the NVRI in line with the positions of international organizations. The post-2015 Development Agenda includes sustainable development recommendations to boost progress toward the Millennium Development Goals in compliance with the Rio+20 Summit. The Development Agenda draws on key insights and policy levers that could help countries achieve sustainable and inclusive growth (World Bank, 2008). However, by omitting references to sustainability in VR indexes, no evaluation of the multifaceted characteristics of development is feasible. The worldwide spatiotemporal application demonstrates the value added by the hierarchical multimetric NVRI to identify a country’s strengths and weaknesses and pinpoint the policy orientations that should be implemented to achieve sustainability.

The successive steps of the analysis are presented as follows: Section 2 uses key examples to survey the measurement of VR in development economics and provides evidence of some misconceptions that may have influenced the construction of currently used composite indexes. Section 3 reviews the mathematical basis of the NVRI. Section 4 describes the ranking of countries using a worldwide sample. Section 5 discusses the results by analyzing their practical policy implications, and Section 6 concludes.