Measures of economic vulnerability and inter-dependency in the global economy

• Main Authors: Lai, Jikon, Amalina Anuar
• Other Authors: -
• Format: Working Paper
• Language: English
• Published: Nanyang Technological University 2021
• Subjects: Social sciences::Political science
• Online Access: https://hdl.handle.net/10356/146613
• Institution: Nanyang Technological University

Amidst the on-going US-China trade and technology war, as well as supply chain disruptions owing to the COVID-19 pandemic, issues of economic diversification and resilience have increasingly occupied policymakers and businesses alike. Yet despite the ascendance of these policy issues, identifying, measuring, and evaluating levels of economic risk, vulnerability, and inter-dependence to generate policy action is not always a straightforward and clear process. Moreover, although much has been written on economic inter-dependence, less is known about the vulnerabilities of the vast majority of countries. In other words, how might we measure and quantify economic dependency and vulnerability? How would we normatively evaluate these factors? Are certain countries more economically dependent and vulnerable than others? Similarly, how might we recognise appropriate diversity in risk-exposure? In this paper, we develop the indices of vulnerability and inter-dependence to address the aforementioned issues. As a quantitative gauge of levels of vulnerability and inter-dependence across countries, these indicators are intended to serve as instruments in the formulation of national economic policies and address concerns over economic security by enabling cross-country comparisons and the qualitative assessments of economic dependency and vulnerabilities.