Vulnerability index a better measure of development aid needs than GDP

The Universal Vulnerability Index (UVI) may be a better way to measure development aid needs, a recent report argues. Defining UVI as a tool with which to measure a country’s economic vulnerability to natural and external shocks, its physical vulnerability to climate change as well as its social and political vulnerabilities, the report’s authors note that the index is better placed than GDP to make decisions on the distribution of aid particularly in terms of funding resilience to climate shocks.

The report, developed by the Commonwealth of Nations, a 53-member-state intergovernmental organization, notes that GDP does not precisely reflect the extent to which countries are vulnerable to climate change. It, therefore, does not allow a decision to be made regarding the range of assistance that should be channeled to curb problems related to this. However, UVI includes more nuanced and comprehensive data that does properly assess not only the economic situation but also climate change resilience.

“In an age of big data, complex analysis, and artificial intelligence, we cannot rely on decades-old systems and 18th-century concepts to guide us, and we must fundamentally overhaul the way we think about development finance,” said the Commonwealth Secretary-General, Patricia Scotland.

The report points out that many small island countries that do not fall into the low-income category are in need of funding to bolster their resilience to climate shocks. It notes that the level of climate vulnerability in small island states is underestimated as they are highly prone to climate shocks. However, since some have a fairly high GDP, they are not the subject of development assistance channeled to mitigate these.

“One of the most interesting results from the index is that we have evidence to align to the fact that GDP is not a good reflector of vulnerability. High middle-income countries actually show a higher vulnerability than lower-middle-income countries, according to the index,” said Travis Mitchell, head of economic policy at the Commonwealth of Nations.

The island state Dominica which, according to the World Bank, is an upper-middle-income country, lost over 100% of its GDP in 2017 when it was hit by Hurricane Maria, the report revealed. Tonga, Grenada, Antigua, and Barbuda also faced a similar situation.

The Universal Vulnerability Index covers 138 countries and, of these, the least developed African states are followed by small island countries in terms of vulnerability.