The Centennial Resilience Index: Measuring Countries’ Resilience to Shock

Abstract

At the Emerging Markets Forum in October 2010, initial results were presented from an exercise that attempted to measure the resilience of emerging market and developing countries (EMDCs) to deal with shocks to their economies. This paper updates, improves upon, and draws conclusions from that index. A key conclusion is that the Resilience Index appears to have the power both to identify economies that are heading to trouble and to identify the specific policy areas of weakness that lie behind their increasing vulnerablility. The Resilience Index can add to the tools of the economic surveillance process—at least as a device to help insure that weaknesses are surfaced, and that deeper analysis is conducted to assess those weaknesses and suggest corrective policies. It is clear from this analysis that building resilience—and making it a priority of policymakers—can pay high dividends. In particular, we show that the Resilience Index clearly demonstrates that emerging weaknesses in many economies were evident well before the global crisis and the crisis in Europe.