Using GDP is poor indicator of long-term sustainable development
A recent analysis by the Commonwealth secretariat on vulnerability argues that using the GDP as measurement is a poor indicator of long-term sustainable development; and needs to be transformed.
Patricia Scotland, the Commonwealth secretary-general, said in a statement that she was 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 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 Commonwealth scribe 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 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,” Scotland said.
The virtual panel also included the minister of foreign affairs, immigration and trade of Antigua and Barbuda, E.P Chet Greene, the minister of information and communication infrastructure of Gambia, Ebrima Sillah, and the high commissioner of Fiji to the United Kingdom, Jitoko Tikolevu.
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.
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.
The Commonwealth is a voluntary association of 54 independent and equal sovereign states with a combined population of 2.4 billion, of which more than 60 per cent is aged 29 or under. The body spans the globe, and includes both advanced economies and developing countries.
Thirty-two of the members are small states, many of which are island nations. Its secretariat supports member countries to build democratic and inclusive institutions, strengthen governance and promote justice and human rights.