University of Malta. Islands and Small States Institute
Abstract
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