Resilience Matters | New times
Countries today face many challenges. Economic globalization, migration, demographic changes, health, environmental issues and climate change put all countries, regardless of their size or wealth, under constant pressure. The global COVID-19 pandemic is also an example. The recent health crisis not only revealed the high level of interconnectedness between economies and the volatility of the global economy, but it also underscored the need for effective political capacity to guide policies and support global efforts in favor of vaccination. He showed that all countries are vulnerable to global economic shocks in a globalized world. We also know that some countries, especially small states, are inherently vulnerable to external shocks. What matters in today’s world is the strategy and the ability to respond to these negative shocks. This responsiveness is described as resilience.
Resilience refers to a country’s ability to quickly recover from a negative external shock. Unlike vulnerability, which is inherent in small states, especially island states, resilience is encouraged. Resilience takes on greater importance in countries that are inherently more exposed to external shocks, such as small island states. In this context, it is indeed a prerequisite for economic growth and development. By building resilience, individuals, communities and governments will be empowered to face, act and meet the challenges of the 21st century.
However, the starting point for any discussion of resilience must start with vulnerability. This concept has intrigued academics as well as international organizations over the past decades. The Commonwealth Secretariat is one such organization that has actively promoted the global debate on vulnerability and resilience and operationalized the concepts through clues that highlighted the divergence between countries, especially among small Island States. Towards the end of June 2021, the Commonwealth Secretariat released a flagship publication on the development of a new Universal Vulnerability Index which should also be used to help countries negotiate external aid and assistance.
The vulnerability of an economy as defined here results from the risk of exogenous shocks of various origins, such as economic, climatic or societal shocks. This may be due to the instability of the international price of primary products for countries still dependent on raw material exports, or severe weather events, which drastically reduce agricultural production, or lasting violence, for example when a country becomes a hub for international drug trafficking or faces a high level of crime. In addition, as recent history has shown, epidemics, resulting in loss of human life and economic activity.
Many structural factors lead to the high sensitivity and exposure of small states to exogenous factors.
shocks, whether it is their small size itself, their geographic location, or simply their low level of development resulting in a lack of infrastructure and poor diversification of economic activities. It is the responsibility of national policies to mitigate the consequences of exogenous shocks.
However, while resilience largely depends on the will of governments, there are also structural factors that condition resilience. A low level of development in any developing country is usually accompanied by a low level of education and health, an age structure of the population involving a high proportion of young people, and sometimes the presence of refugees from other countries. vulnerable. These characteristics of developing economies weigh on their public finances and make it difficult to implement counter-cyclical fiscal policies. In addition, low human capital reduces the capacity of the public and private sectors, which are essential for resilience.
Within the Commonwealth’s universal and multidimensional vulnerability framework, economic vulnerability to external and natural shocks is considered alongside vulnerability to climate change and socio-political or societal fragility. In addition, it integrates accumulated and contemporary political sources of resilience.
Concretely, the indicators used to develop the universal framework of vulnerability separate the endogenous and exogenous or structural elements, the latter not resulting from current policies, but being able to result from previous political choices that the current authorities have inherited, such as the trade structure.
The structural vulnerability of a country therefore depends on both the historical probability and the magnitude of shocks, reflected by the instability of exports, for example, as well as the country’s structural exposure to these shocks, illustrated for example. by the degree of commercial dependence, often linked to the small size of the country. In contrast, a country’s resilience, defined as its ability to cope with (or react to) exogenous shocks, is the opposite of vulnerability, and depends to a large extent on the current will of countries, but also structural factors, which effective resilience policies.
A quick review of the results presented by the Commonwealth Secretariat shows that Rwanda is one of the best performing countries in actions taken to reduce vulnerability and resilience. Although vulnerability is seen more as a structural problem and taken for granted, the situation in Rwanda improved significantly between 2010 and 2018 and in fact experienced the greatest decline in vulnerability. Even on the resilience front, Rwanda’s positioning has improved considerably, with the resilience index also increasing significantly. This shows that the policies implemented by Rwanda in fact not only contribute to current economic results and performance, but more importantly, strengthen the country’s coping mechanism and reduce its exposure to shocks in the first place.
Building resilience is a transformative process that relies on the ability of individuals, their communities and institutions to mitigate the impacts of shocks, internal or external, natural or man-made, economic, health-related , political or social. The results showed that Rwanda is engaged in this process of transformation.
JP Fabri is a co-founding partner of Seed, a research-driven consulting firm based in Malta, Europe.