Improving the measurement of export instability in the Economic Vulnerability Index: A simple proposal

Overview & Synopsis

The Economic Vulnerability Index (EVI) is a well-recognized measure of the structural vulnerability of developing countries and is one of the three criteria used for the identification of Least Developed Countries (LDCs). Both for effectiveness and equity reasons, the EVI is also retained as a relevant criterion for aid allocation between developing countries. Such an index, in its construction as in its measure, must be beyond reproach. Here, we propose an improvement in the measurement of one of the most important component of the EVI, namely the instability of exports of goods and services. The implications of the proposal in terms of scores and ranks are then discussed.