New framework uses pre-and-post shock vulnerability data to identify the best recovery path and the investment need for small and vulnerable states.
The Caribbean Development Bank (CDB) has taken the case for its vulnerability and resilience measurement framework to the United Nations (UN), proposing that its system is the best option for determining access to affordable finance for small states.
Many small states suffer from their sustainable development efforts being derailed by external shocks spanning volatility in international markets, natural hazards, health crises and geopolitical disturbances. The CDB’s framework is being developed to help overcome this challenge by establishing more useful measures than gross national product.
CDB president, Dr Hyginus ‘Gene’ Leon, addressed the UN High-Level Political Forum on Sustainable Development at the UN headquarters in New York, proposing the adoption of a framework, which uses the measurement of a country’s internal resilience capacity (IRC) combined with the bank’s recovery duration adjuster (RDA) tool, to underpin access to affordable finance.
Dr. Leon said: “Many developing countries, especially small island developing states, continue to struggle with the increasing frequency of economic, environmental, and socio-political shocks. In the Caribbean, for instance, we face significant legacy structural weaknesses that have been amplified by the ongoing Covid-19 pandemic, the impact of climate change, and the fallout from the Russia-Ukraine war. These challenges have ruined productive activities, disrupted educational services, widened income and gender inequalities and heightened food and energy insecurity as supply chains faced major disruptions.”
He added, “Further, our countries remain among the most vulnerable and least resilient in the world, making the recovery from shocks of long duration. This combined cocktail, resulting in low competitiveness and productivity, has reduced the scope for the region to realistically achieve many of the sustainable development goals by 2030.”
The IRC metric captures the structural and vulnerability factors constraining growth and development in a country pre-shock, then the RDA evaluates the magnitude, impact, and persistence of effects once a shock occurs. The framework then calculates the nature and level of finance required to recover from the shock and put the country on a growth path.
Dr Leon explained: “This framework can provide an easily understood dashboard for gauging the resilience capacity of countries (low, medium and high) and thereby eligibility to development or concessional finance that will depend on need and resilience capacity and less on past income levels.”
