ECONOMIC VULNERABILITY AND ECONOMIC GROWTH: SOME RESULTS FROM A NEO-CLASSICAL GROWTH MODELLING APPROACH

This paper incorporates economic vulnerability, defined as the increased proneness of certain economies to downside risks, within a neo-classical economic growth model to seek an explanation to the observation that a number of vulnerable economies enjoy high per capita output levels. Steady state results indicate that the more vulnerable economy would tend to have a higher per capita capital stock and output but a lower per capita consumption level, as resources are allocated to counteract vulnerability. Dynamic modelling results indicate that vulnerability reduces the speed of convergence between economies at different states of development.Economic Vulnerability, Economic Growth, Economic Convergence, Small Economies

Economic resilience and market efficiency in small states

Economic resilience is the ability of an economy to withstand and rebound from the effects of adverse shocks. This is dependent upon the efficiency with which resources are allocated and can be reallocated following changes in exogenous conditions. Markets are a key factor in the allocation of resources, be they capital, labour, goods and services. Therefore, the extent to which markets operate efficiently is an important determinant of economic resilience. On the other hand, it is to be considered that instances of market failure are more common in small, vulnerable economies, which consequently have greater need for policy measures aimed at enhancing the efficiency of markets or at replacing them with appropriate mechanisms conducive towards building economic resilience. In this context, it is important to avoid instances of policy failure, which may nevertheless apply to a larger extent in small economies.peer-reviewe

Measuring vulnerability : a methodological review and a refinement based on partner country and price volatility issues

Indexes of vulnerability are intended to measure the proneness of countries to exogenous shocks lying outside their control, or to the increased susceptibility of such countries to the adverse effects of these shocks. The main attempts to measure vulnerability found in the literature focus mainly on openness to international trade and capital flows, export concentration and dependence on strategic imports. This paper presents a conceptual refinement to these ideas by assessing the importance of the stability of partner countries and of price volatility as important determinants in the way in which such variables impact on vulnerability. Subject to the usual measurement problems, the index proposed here generally confirms that small states, particularly if insular, tend to face heightened degrees of vulnerability.peer-reviewe

Agriculture in Malta

In 2005 and 2006, Maltese agriculture continued to adjust to EU membership and to its single market, with strong emphasis on environmental awareness, food safety and animal welfare. This adjustment was not an easy one as it followed many years of protectionist policies. In fact, all sectors required either radical reorganization in the way they operate or outright restructuring.peer-reviewe

Economic Vulnerability and Resilience: Concepts and Measurements

In this paper, economic vulnerability is defined as the exposure of an economy to exogenous shocks, arising out of economic openness, while economic resilience is defined as the policy-induced ability of an economy to withstand or recover from the effects of such shocks. The paper briefly reviews the work already carried out on economic vulnerability and extends the research towards the development of a conceptual and methodological framework for the definition and measurement of economic resilience. Towards this end, the paper proposes an index of economic resilience gauging the adequacy of policy in four broad areas, namely macroeconomic stability, microeconomic market efficiency, good governance and social development. The analysis of economic resilience explains how small economies can attain a relatively high level of gross domestic product (GDP) per capita if they adopt appropriate policy stances. In other words, the relatively good economic performance of a number of small states is not because, but in spite of, their small size and inherent economic vulnerability. The results of this study can be used as a tool towards the formulation of policies aimed at overcoming the adverse consequences of economic vulnerability.economic vulnerability, economic resilience, small states

The 21st century maritime silk road islands economic cooperation forum annual report on global islands 2018

The creation of successful business environments is an important prerequisite for durable and sustainable competitiveness. This chapter documents the type of constraints that may hinder business success as well as the policy approaches that may create operating environments conducive to business success in small island contexts. Surrounding influences and circumstances are well known to make considerable difference for business―both on a national and global level. The defining characteristics of small island economies themselves have also been explored and documented in what is now a considerable body of research. Less well known is the manner in which conditions in small island contexts may make a difference to business. The contribution of this chapter lies in juxtaposing knowledge on the type of contextual conditions that may result in business success against situational considerations applicable in small island contexts. The chapter reviews the kind of market and regulatory failures that may hinder business success and then proceeds to examine a number of good-practice examples in the domains of connectivity, sector-led initiatives, innovation, place-based approaches, sustainable tourism, circular economics, and climate change. Drawing lessons from islands that have managed to actively capitalize on their geographic specificities and succeeded in attaining higher levels of competitiveness, the chapter provides a synthesis of factors that create the right environment for business to develop and flourish in small island contexts, and that boost marine island economy competitiveness. Today’s marine economy is, however, dependent upon onshore infrastructure; labour; expertise; and healthy and stable ecological, social, and political environments, none of which can simply be taken for granted. The very factors that make islands ideal for hosting marine activities—such as an extensive land-sea interface and density-facilitated agglomeration economies—may be placed at risk by marine economyoriented island development. It is thus that economic activities on the land-sea interface—whether port services or coastal tourism—can reduce islanders’ access to the sea as well as lead to environmental degradation that threatens the continued viability of the economic activities in question. Those pursuing island development should take care to balance short-term and longterm objectives while leveraging the very real competitive advantages that arise from island spatialities.peer-reviewe

Small states and the pillars of economic resilience

Economic resilience is the ability of an economy to withstand and rebound from the effects of adverse shocks. This is dependent upon the efficiency with which resources are allocated and can be reallocated following changes in exogenous conditions. Markets are a key factor in the allocation of resources, be they capital, labour, goods and services. Therefore, the extent to which markets operate efficiently is an important determinant of economic resilience. On the other hand, it is to be considered that instances of market failure are more common in small, vulnerable economies, which consequently have greater need for policy measures aimed at enhancing the efficiency of markets or at replacing them with appropriate mechanisms conducive towards building economic resilience. In this context, it is important to avoid instances of policy failure, which may nevertheless apply to a larger extent in small economies.peer-reviewe

Profiling economic vulnerability and resilience in small states : conceptual underpinnings

Small states are economically vulnerable because of their inherent proneness to exogenous shocks over which they can exercise very little control, if any. Such shocks in the main emanate from the small states’ structural openness to international trade, their high dependence on a narrow range of exports and their reliance on strategic imports, notably fuel and food. The high degree of fluctuations in GDP and in export earnings registered by many small states is considered as one of the manifestations of exposure to exogenous shocks. In spite of this, there are a number of small states that have managed to generate a relatively high GDP per capita. This is ascribed to their economic resilience, which refers to the policy-induced ability of an economy to recover from or adjust to the negative impacts of adverse exogenous shocks.peer-reviewe

Towards the development of the concept and the measurement of economic resilience

This paper develops a conceptual and methodological framework for the analysis and measurement of economic resilience. The working definition of economic resilience adopted in this paper is the "nurtured" ability of an economy to recover from or adjust to the effects of adverse shocks to which it may be inherently exposed. This concept is used to provide an explanation as to why a number of inherently vulnerable countries have attained relatively high levels of GOP per capita. The paper also presents a tentative approach aimed at developing an index of economic resilience covering four aspects namely macroeconomic stability, microeconomic market efficiency, governance and social development.peer-reviewe