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New global index seeks to transform how developing nations are supported

24 June 2021

Commonwealth Secretariat analysis on vulnerability argues that GDP is poor indicator of long-term sustainable development and needs to be transformed

The Commonwealth Secretary-General Patricia Scotland has spoken today urging the international community to make crucial changes to how it delivers finance to developing nations, proposing a new system that moves beyond the use of GDP as the sole criteria for receiving certain types of support.

At a virtual media briefing, the Commonwealth Secretariat presented a ground-breaking study that assesses how vulnerable or resilient developing countries are to economic, socio-political and environmental shocks, such as climate change, which could influence how much international finance they can access.

The proposed Universal Vulnerability Index (UVI) has been shared with Commonwealth member countries for their review in ongoing consultations. If endorsed globally, the Index could transform the way development finance is delivered to developing nations.

Speaking ahead of the event the Secretary-General said:

“We must do better and act smarter when it comes to the support the international community gives to more vulnerable countries. If we are to rise above the current interlinked global crises we face, we need to muster all our resources in the most effective way.

“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 but must fundamentally overhaul the way we think about development finance.

“We need to move beyond the thin analysis that GDP and per capita income provide us in determining of the type of support vulnerable countries should receive, towards a more realistic, nuanced and comprehensive understanding of what drives vulnerability and resilience. We cannot return to business as usual.”

‘Realistic’ multidimensional approach

Developed by experts at the Commonwealth Secretariat and the Foundation for Studies and Research on International Development, the UVI uses widely available data to generate single composite scores for vulnerability for 138 developing countries. The Index takes into account factors such as climate change, exposure to natural disasters or economic shocks, internal violence as well as governance.

Speaking at the press briefing, the High Commissioner of Fiji to the United Kingdom, Jitoko Tikolevu said:

“Income-based measures seldom reflect the real vulnerabilities of small island developing states exposure to inherent risk and limitations. The Gross National Income of SIDs is inflated by exogenous sources of income, such as tourism and remittances, which have all been wiped out by the Covid-19 pandemic. The UVI carries specific benefit for Fiji and the pacific islands as it could serve as a unified mechanism to turning attention to the inclusion of vulnerability indices in eligibility and criteria for concessional development finance.”

Key to the study is the distinction it makes between ‘structural’ factors that are beyond the control of the state, such as a country’s geographic location and size, and ‘non-structural’ ones that are more dependent on the will of governments, such as policy performance.

According to these indicators the poorest nations in the world - those classified as Least Developed Countries - are the most vulnerable group, along with Small Island Developing States at the frontline of the climate crisis. Specifically, the report finds that the highest levels of vulnerability occur in Africa, closely followed by the Pacific and Caribbean regions.

The study has been presented to the Commonwealth’s governing board and is undergoing further consultation with member states. It will feed into international discussions around vulnerability, resilience and the efforts of small states to make a “green recovery” from the COVID-19 pandemic.

Download the Commonwealth’s UVI report (PDF). This report is currently under consultation by member countries.