ARE SMALL ISLAND DEVELOPING STATES MORE ECONOMICALLY VULNERABLE THAN OTHER DEVELOPING COUNTRIES?

This paper proposes a robust measure of economic vulnerability for developing economies. We focus on small island developing states, which are known to be highly vulnerable compared to other developing groups. We exploit the Economic Vulnerability Index (Ew) developed by the United Nations Committee for Development Policy (uNcop), but we adopt an endogenous weighting system rather than the more common ad hoc weights system traditionally retained. Therefore, we apply the new multi-criteria decision approach derived from data envelopment analysis (DEA) proposed by Hatefi and Torabi (20101 to the UNCDP'S evi for 2009 data. Implementing this approach for a set of developing countries that includes several small island states provides mixed support for the conventional finding: although small island developing economies are obviously prone to high economic vulnerability, the magnitude of this vulnerability seems to be significantly decreased with our new index.