Macroeconomic Vulnerability of Less-Developed Countries

Abstract

A country is vulnerable when it is susceptible to shocks. This chapter uses data from 34 developing countries to investigate vulnerability trends for them since the 1990s. We find that the level of economic development is inversely related to macroeconomic vulnerability. The countries that became less primarily vulnerable belong to the upper middle-income and middle-income groups; the reverse is true for most vulnerable countries up to 2014. Argentina and Papua New Guinea became more vulnerable from 2016 to 2020. Income plays a crucial role in deciding vulnerability in the globalization era. Geographical location is a key factor in measuring vulnerability, especially in African countries. But the reverse result took place in the de-globalization era. The majority of the upper middle-income and lower middle-income countries are among the most vulnerable. Surprisingly, lower-income groups include the nations with significantly lower IMV values.

Citation

Bhattacharyya, R. and Chatterjee, R. (2024), "Macroeconomic Vulnerability of Less-Developed Countries", Bhattacharyya, R. and Mazumdar, D. (Ed.) Contemporary Issues in International Trade, Emerald Publishing Limited, Leeds, pp. 49-61. https://doi.org/10.1108/978-1-83797-320-020241004