Vanuatu : a profile of economic vulnerability and economic resilience

Abstract

This report presents a profile of Vanuatu's economic vulnerability and economic resilience. Economic vulnerability is defined as the exposure of an economy to harmful external economic shocks that are outside the economy's control, typically resulting from high degrees of economic openness and dependence on a narrow range of exports. Economic resilience is the policy-induced ability of an economy to withstand and rebound from the negative effects of such shocks. In this report, such resilience is associated with macroeconomic stability, market efficiency, good political governance, social development and good environmental management, as explained in Briguglio et al. (2006, 2009). Economic vulnerability and insufficient resilience typically lead to a slower and more volatile pattern of economic development (Cordina 2004a, 2004b).