UN General Assembly launched the Multidimensional Vulnerability Index (MVI) to assist small island developing states (SIDS) in securing low-interest financing.Since the 1990s, SIDS that don’t qualify for low-interest development loans due to their relatively higher GDP per capita have been advocating for a measure that accounts for their vulnerability to external shocks like climate change.
Multidimensional Vulnerability Index
- The MVI is a new international quantitative benchmark to measure structural vulnerability and the lack of structural resilience across multiple dimensions of sustainable development at the national level.
- It can be used to complement Gross National Income (GNI) per capita.
Need of MVI
- Current Limitations: National income, typically measured by Gross National Income per capita, is an inadequate indicator of development and well-being, especially for countries facing high risks of external shocks.
- Access to Concessional Financing: Countries often struggle to access affordable development support, such as concessional assistance, because eligibility is based on income thresholds rather than vulnerability.
- Inclusive Aid Allocation: A widely accepted MVI could better guide development policies, aid allocation, and provide early identification of nations requiring international assistance.
Structure of the MVI:
It incorporates two main components
- Universal Level Quantitative Assessment: A summary index ranks countries based on their structural vulnerability and resilience using a common methodology. This is presented as an overall MVI score.
- Vulnerability-Resilience Country Profiles (VRCP): It is a more detailed, tailored, and individualised characterisation of a country’s vulnerability and resilience factors.
Key Principles Guiding MVI Index Construction
It follows several guiding principles in construction of MVI.
- Multidimensionality: Indicators used should cover all three dimensions of sustainable development, i.e. economic, environmental, and social.
- Universality: The design of the index should capture the vulnerabilities of all developing countries to ensure credibility and comparability.
- Exogeneity: The index must clearly differentiate between policy-induced and exogenous (or inherited) factors to reflect the structural and inherent challenges faced by countries, independent of the political will of their governments.
- Availability: The index should use available, recognized, comparable, and reliable data.
- Readability: The design of the index should be clear and easily comprehensible.
Conceptual Framework for the MVI: The MVI is built on two main pillars.
- Structural Vulnerability: It is linked to a country’s exposure to adverse external shocks and stressors.
- Structural Resilience: The capacity of a country to withstand and recover from such shocks.
The conceptual framework elaborates the three dimensions of sustainable development i.e., economic, environmental, and social as they apply to each pillar:
- Economic Vulnerability: Risk from adverse external economic shocks.
- Environmental Vulnerability: Risk from natural hazards, climate change, and anthropogenic shocks.
- Social Vulnerability: Risk from social shocks.
- Structural Economic Resilience: The inherent economic capabilities and capital that strengthen a country’s ability to recover.
- Structural Environmental Resilience: The inherent environmental capital, including ecological resources and infrastructure, that reduces vulnerability.
- Structural Social Resilience: The inherent social capabilities, including social cohesion and human capital, that enhance adaptive capacity.