A Novel Framework For Analyzing Idiosyncratic And Covariate Shocks In Developing Countries
Free (open access)
1123 - 1134
R. A. Balgah
The observed and predicted increases in idiosyncratic and covariate shocks in developing countries demands new approaches and tools to analyze and manage such events. The social risk management (SRM) framework developed by the World Bank at the end of the 20th century no longer seems very appropriate in empirically analyzing the increasing frequency and contemporary complexity accompanying small and large scale extreme events witnessed especially in developing countries where states and risk markets often fail, are missing or function only partially. This paper suggests a novel multidimensional framework, which is more appropriate for analyzing shock dynamics in developing countries. The SRM framework is succinctly presented. The novel, multidimensional framework is then presented, emphasizing its links to and distinctions from the SRM framework. Contemporary empirical applications of the Multi-sector framework in Cameroon are then presented, and conclusions are made on the implications of applying the novel framework for analyzing and managing idiosyncratic and covariate shocks especially in developing countries.
SRM framework, shocks, novel framework, developing countries