LDC Graduation Criteria - Calculations Behind

Jin (Lara) Zhou (Ms.) Research Assistant Intern on LDC Graduation Poverty Reduction Unit, UNDP Lao PDR Jin.lara.zhou@undp.org jz2417@columbia.edu

Table of Contents
Acknowledgement LDC Identification LDC Graduation Criteria Factsheet 1. GNI per capita GNI PC Graduation Threshold 2. HAI Introduction Methodology Sub-indicators HAI Summary HAI Graduation Threshold 2012 HAI Change over time 2009 & 2006 3. EVI Introduction Methodology Exposure Index sub-indicators Exposure Index Summary Shock Index sub-indicators Shock Index Summary EVI summary EVI Graduation Threshold 2012 EVI Change over time 2009 & 2006 Summary Summary of Equation choice Useful Reference Data Sources Sub-indicators 1. GNI per capita 2.1 Percentage of population undernourished 2.2 Under-five mortality rate 2.3 Gross secondary enrollment rate 2.4 Adult Literacy Rate

3.1.1 Population(Size) 3.1.2 Remoteness(Location) 3.1.3.1 Merchandise Export Concentration(Economic Structure) 3.1.3.2 Share of Agriculture Forestry Fishery (Economic Structure) 3.1.4 Share of Population in Low Elevated Costal Zone (Environment) 3.2.1 Instability of Exports(Trade Shock) 3.2.2.1 Victims of Natural Disasters(Natural Shock) 3.2.2.2 Instability of Agricultural Production(Natural Shock)

Acknowledgement
This material has been prepared by Jin Zhou, research assistant intern on LDC graduation roadmap in UNDPs Poverty Reduction Unit in Lao PDR. Special acknowledgement should be given to Mr. Matthias Bruckner, who is the Economics Affairs Officer at UNCDP Secretariat for his guidance and generous help on clarifying concepts, methodologies and calculations of all the indicators. Any comments should be addressed to the author by e-mail: jin.lara.zhou@undp.org. OR jz2417@columbia.edu

LDC Identification
Qualitatively
Low Income

Quantitatively
GNI Per capita

Severe Structural Impediments to sustainable development

Human Assets Index (HAI) Economic Vulnerability Index (EVI)

One-Page Snap Shot of all Indicators

MDG 1

MDG 7 MDG 8 MDG 2/3 MDG 4/5 MDG 2/3 MDG 1

1.GNI per capita

UN CDP draws data directly from World Bank:
GNI per capita in current US dollars, Atlas Method

Source
http://databank.worldbank.org/ddp/home.do http://data.un.org

1.GNI per capita

How does World Bank Calculate:
GNI per capita in current US dollars using the Atlas Method

* World Banks Atlas Method

Purpose:
To reduce the impact of short-term fluctuations in exchange rates in the cross-country comparison of national income.

1. GNI Per Capita-Graduation threshold

Graduation threshold:
20% higher above the inclusion threshold Inclusion threshold: 3-year average falls under WBs low-income countries category

Note:
If a country can achieve a level of GNI per capita that is at least twice the graduation threshold, the country is eligible for graduation even if it doesnt meet either one of the two other criteria (EVI or HAI)

Change over time-GNI 2012

Inclusion Threshold:992

Graduation Threshold:1190

2012 LDC Review:913.3

Change over time-GNI 2009

Inclusion Threshold:905

Graduation Threshold:1086

2009 LDC Review:510

Change over time-GNI 2006

Inclusion Threshold:749

Graduation Threshold:900

2006 LDC Review: 350

2.HAI - Introduction
Measures human capital (Health + Education):

2.HAI - Methodology
Calculation: max-min procedure
Original data are converted into indices ranging from 0 to 100, based on minimum and maximum values in a set of reference countries. What does this mean?
I = [(V-min)/(max-min)] x 100 or II = [(max-V)/(max-min)] x 100 V=observed value for a certain indicator I=100-II, the index ranges from 0 to 100
(Summary on Equation choice)

Reference Group:
All LDCs and those whose three-year average GNI per capita income is less than 20% higher than low income threshold determined by WB. Basically its LDCs and lower income non-LDCs.

2.HAI - Methodology (contd)

Note:
The max & min are not the largest and smallest values in the reference group distribution. The bounds are based on values of all developing countries, not just the reference group. But in some cases, largest or smallest values are actually used as bounds.

Purpose: Eliminate the effect of extreme outliers in the distribution Practice: The bounds will replace the actual country data in the calculation of the index concerned. For example: (Population) Min boundary = 0.15 million, Max boundary = 100 million Countries whose population is fewer than 0.15 million have their value of population replaced by 0.15 million. Countries whose population is larger than 100 million have their value of population replaced by 100 million.

2.1 Percentage of Population Undernourished

Definition: (FAO) People whose food intake is less than their minimum
requirements. Average min energy requirement per person is 1800 kcal per day. Exact requirements is determined by a persons age, body size, activity level and physiological conditions such as illness, infection, pregnancy and lactation.

Example: 2012 Review

Upper Bound(Max) Lower Bound(Min) 65.00

Lao PDR 22.00

5.00

Undernourishment the lower the better, use equation II = [(max-V)/(max-min)] x 100 Index for undernourishment = [ (65-22)/(65-5))] *100 =71.7

UNCDP draws data from FAO Food Security Statistics or UN Database http://www.fao.org/economic/ess/ess-fs/fs-data/essfadata/en/ , http://data.un.org/

2.2 Under-five Mortality

Definition:
(UN) Probability per 1,000 that a newborn baby will die before reaching age five.

Example: 2012 Review

Upper Bound(Max) Lower Bound(Min) 175.00 10.00 Lao PDR 57.00

Under-five Mortality the lower the better, use equation II = [(max-V)/(max-min)] x 100 Index for under-five mortality= [ (175-57)/(175-10))] *100 =71.5

Data Source: WB databank, UN DESA Population Prospects Database

http://databank.worldbank.org/ddp/home.do http://esa.un.org/unpd/wpp/Excel-Data/mortality.htm http://data.un.org,

2.3 Gross Secondary Enrollment Rate

Definition: (WB, UNESCO)Number of pupils enrolled in secondary schools
regardless of age/population in the theoretical age group for the same level of education

Example: 2012 Review

Upper Bound(Max) Lower Bound(Min) 100.00 10.00 Lao PDR 44.70

Secondary enrollment the higher the better, use equation I = [(V-min)/(max-min)] x 100 Index for Secondary Enrollment = [(44.7-10)/(100-10)]*100=38.5

Data Source: UNESCO Institute for Statistics, WB Databank, http://stats.uis.unesco.org/unesco/ReportFolders/ReportFolders.aspx http://databank.worldbank.org/ddp/home.do

http://stats.uis.unesco.org/unesco/ReportFolders/ReportFolders.aspx Folder Education Table 5: Enrollment Ratios by ISCED levels Gross enrollment ratio, Secondary, all programs, total.

2.4 Adult Literacy Rate

Definition: (UNESCO) Literate people aged 15 or above as a percentage of total
population of this age group, literacy is defined as If he/she can read and write, with understanding, a simple statement related to his/her daily life

Example: 2012 Review

Upper Bound(Max) Lower Bound(Min) 100.00 25.00 Lao PDR 72.7

Literacy the higher the better, use equation I = [(V-min)/(max-min)] x 100 Index for Literacy = [(72.7-25)/(100-25)]*100 = 63.6

Data Source: UNESCO Institute for Statistics, WB Databank

http://www.uis.unesco.org, http://databank.worldbank.org/ddp/home.do

http://stats.uis.unesco.org/unesco/ReportFolders/ReportFolders.aspx Folder Literacy and Educational Attainment National Adult Literacy Rates (15+) The most recent data available during 2005-2010

2. HAI Final Index Calculation

Undernourishment 71.7 Under-Five Mortality 71.5 Secondary Enrollment 38.5 Adult Literacy 63.6

HAI for 2012 = * (71.7+71.5+38.5+63.6) = 61.4

2. HAI Graduation Threshold 2012

Graduation Threshold:
10% above the inclusion threshold Inclusion threshold: third quartile of the distribution comprising all countries in the reference group. (those who score in the lowest 75% are all included)

Inclusion threshold: 60

Graduation threshold:66

2006 Review54.05

2012 LDC 2012 ReviewReview: 61.4 61.4

Change over time-HAI 2009

Inclusion threshold: 60

Graduation threshold:66

2009 LDC Review: 62.3

Change over time-HAI 2006

Inclusion threshold: 58

Graduation threshold:64

2006 LDC Review: 54

3.EVI - Introduction
Reflects the risk posed to a countrys development by exogenous shocks, the lower the better
Exposure to shock (exposure index) the higher, the lower EVI, the better Magnitude of the shock (shock index) the lower, the lower EVI, the better

3.EVI -Methodology
Same as HAI
Max-min procedure

3.1.1 Population (Size -Exposure Index)

Rationale: Larger countries are less exposed to shocks. They often have a more
diversified economy owing to the presence of economies of scale supported by a relatively large domestic market, thus more resilient towards economic shocks. Additionally, they are also less exposed to natural shocks as in small countries often the whole country is affected by one natural shock. (the larger the population, the less exposure) Measurement: logarithm of mid-year (July 1) Population, converted into an Index using the max-min Procedure.

Example: 2012 Review (in millions)

Upper Bound (Max) 100.00

Lower Bound(Min) 0.15

Lao PDR 6.29

The larger the population, the more resilient, less exposure, use equation II = [(max-V)/(maxmin)] x 100 Sub-index for Size= [(Log100 Log6.29)/(Log100-Log0.15)]*100 =42.5

Data source: UN DESA Population Prospects Database http://esa.un.org/unpd/wpp/Sorting-Tables/tab-sorting_population.htm, http://data.un.org

EVI -Exposure Index

3.1.2 Remoteness (Location Exposure Index)

Rationale: Countries situated far from major world markets face high
transportation costs and limits the possibility for economic diversification. (the more remote, the less capable to respond to shocks, the less resilience, the more exposure)

Calculation: trade-weighted minimum average distance for a country to reach 50

% of the world markets.

Data source:
1. Market share of each country in the world markets UN Statistics National Accounts Main Aggregates Database http://unstats.un.org/unsd/snaama/ 2. Bilateral Physical Distance between Lao and other countries Centre d'Etudes Prospectives et d'Informations Internationales (CEPII) http://www.cepii.fr/anglaisgraph/bdd/distances.htm (Use Variable discap in data series: dist_cepii.xls) Bilateral Physical distance is calculated as distance between capital cities or major agglomerations

EVI -Exposure Index

3.1.2 Remoteness (Location Exposure Index)

Step1: Calculate market share of each country Source: United Nations National Accounts Main Aggregates Database Step 1.1: Compute 3-year average trading volume (Import + export) of each partner Step 1.2: Compute market share for each country Example: Get the Data: http://unstats.un.org/unsd/snaama/ GDP by expenditures, in current prices - US Dollars exports of goods and services + imports of goods and services
EVI -Exposure Index

Compute three year average

3.1.2 Remoteness (Location Exposure Index)

Step 1.1: Compute 3-year Avg. trading volume (Import + export) of each country
3-year Avg. Trading Volume = 0.5 * (3-year Avg. Imports + 3-year avg. Exports) Lao Trading Volume 2008-2010 = 0.5 * (1667667105.2+ 2203723238.7) = 1935695171.9
Lao PDR avg. exports 2008-2010 avg. imports 2008-2010 Avg. trading volume 2008-2010 1667667105.2 2203723238.7 1935695171.9 Thailand 205323069949.1 185814473749.3 195568771849.2 .. .. .. World Volume 18136978716389.3 17756893504342.6 17946936110365.9

Step 1.2: Compute market share for each country

Market share of country A = Avg. 3-year trading volume of country A/ Avg. 3-year World Volume Lao market share = 1935695171.9 / 17946936110365.9 = 0.01% Thailand market share = 195568771849.2/ 17946936110365.9 =1.09%

EVI -Exposure Index

3.1.2 Remoteness (Location Exposure Index)

Bilateral Physical Distance

Market Share of Each Country in the World Market

Lao

Thailand

China (use 20% instead of 30%)

EVI -Exposure Index

Real World Example Lao PDR in 2012 Review

Calculated in Step 1 Using UN SNA database: http://unstats.un.org/unsd /snaama/

Where can I get the market share data? = 8703.752*(50%-47.42%) =224.15 = Sum(E2:E111)/50%

UN CDP uses variable dist in data series dist_cepii.xls from CEPII Source: http://www.cepii.fr/anglaisgraph/b dd/distances.htm

Minimum Average Distance to reach 50% of the World Market Where can I get the distance data?
EVI -Exposure Index

3.1.2 Remoteness (Location Exposure Index)

Step 2.3 Logarithm transformation, then converted to Index using Max-Min Procedure

di is the minimum average distance of country I; Dmin, Dmax is the smallest/largest minimum average distance of all 130 countries included in the calculation of the indicator; and ri is the remoteness value of country I; Example: 2012 Review Di (Lao PDR) 4792 Dmin, (Tunisia) 1885 Dmax (Tonga) 10388.4

ri = 100 * [ln(4792)-ln(1885)]/[ln(10388.4) ln(1885)] = 54.66

EVI -Exposure Index

3.1.2 Remoteness (Location Exposure Index)

Step2.4 Adjustment for Landlocked Country

ri* = 0.85*ri + 0.15* lldci

ri* is the adjusted remoteness value of country I; lldci is a dummy variable whose value is 100 for landlocked countries and 0 for other countries Laos adjusted ri* = 0.85*54.66 + 0.15* 100=61.47
15% is a constant coefficient CDP chose to apply to the distance, the reason being that landlocked countries usually face higher barriers to trade and often confront relatively higher transport costs for a given distance. Relying on a number of empirical studies of the transport costs to or from landlocked countries, an adjustment coefficient of 15% was chosen and applied to the distance.

EVI -Exposure Index

3.1.2 Remoteness (Location Exposure Index)

Step2.5 (Max Min Procedure, Example of 2012 Review)
Adjusted Minimum Avg. Distance Index to reach 50% of world market

Upper Bound(Max) Lower Bound(Min) 90 10

Lao PDR 61.47

The higher the remoteness index, the less resilient, the higher the exposure to shock. Use Equation I = [(V-min)/(max-min)] x 100 Remoteness Index = [(61.47-10)/(90-10)]*100 =64.3

EVI -Exposure Index

3.1.3.1 Merchandise Export Concentration (Economic Structure Exposure Index)

Rationale: Reflects the exposure to trade shocks resulting from a concentrated
export structure. (The more concentrated, the less resilient, the more exposure to shocks)

Data Source: UN CDP draws data directly from UNCTAD

http://unctadstat.unctad.org/. Access: International trade Trade Indicators Concentration and Diversification indices of merchandise exports and imports by country Concentration Index

EVI -Exposure Index

Step 1: Calculate 3-year Avg. =(0.366+0.309+0.318)/3 =0.3343513001

3.1.3.1 Merchandise Export Concentration (Economic Structure Exposure Index)

Step 2: Convert by using Max-Min Procedure (Example of 2012 Review) Upper Bound(Max) Lower Bound(Min) 0.95 0.1 Lao PDR 0.3343513001

The higher the merchandise export concentration, the less resilient to exogenous shocks, the higher EVI, use equation I = [(V-min)/(max-min)] x 100 Index for Export Concentration = [(0.3343513001 0.1)/(0.95-0.1)]*100 = 27.57

EVI -Exposure Index

3.1.3.1 Merchandise Export Concentration (Economic Structure Exposure Index)

Reference - How UNDCTAD does the calculation:
Use the Herfindahl-Hirschmann indices derived from applying the following formula to the product categories of the Standard International Trade Classification (SITC) at the three-digit level

Notes: Service is excluded from export due to data constraints.

EVI -Exposure Index

3.1.3.2 Share of Agriculture Forestry Fishery (Economic Structure Exposure Index)

Rationale: Reflects the exposure of countries caused by their economic structure
because AFF are particularly subject to natural and economic shocks; the higher, the less resilient, the more exposure to shocks

Calculation: CDP draws the data of Share of gross value added in the
Agriculture, Forestry, and Fishery sectors in GDP (%) directly from UN SNA database, and then converted to index using max-min procedure.

Example:
Get the Data: http://unstats.un.org/unsd/snaama Value-added by Economic Activity, at current price US dollars Use Variable Agriculture, hunting, forestry, fishing (ISIC A-B) for year 2008-2010

EVI -Exposure Index

Step1: Compute AFF percentage 2008: 1588395821.05462/ 5041728866.4513 = 31.5% 2009: 1703906334.92745/ 5389768132.34538 = 31.61% 2010: 1986718614.70404/ 6214534762.18563 = 31.97% Step 2: Compute three-year average: = 1/3 (31.5% + 31.61%+31.97%) = 31.7%

EVI -Exposure Index

3.1.3.2 Share of Agriculture Forestry Fishery (Economic Structure)

Step 3: Example of 2012 Review Upper Bound(Max) Lower Bound(Min) 60.00 1.00 Lao PDR 31.7

The higher the share of AFF, the less resilient, the higher EVI, use equation I = [(Vmin)/(max-min)] x 100 Index for AFF = [(31.7-1)/(60-1)]*100 = 52.0

EVI -Exposure Index

3.1.4 Share of Population in Low Elevated Costal Zone (Environment Exposure Index )
Rationale: Reflects vulnerability to coastal impacts such as sea level rise, storm
surges associated with climate change. (the higher, the less resilient, the more exposure to shocks) Definition: Low elevated coastal zone is defined as an area contiguous to the coast below 10 meters of elevation Data Source:
Columbia University, Center for International Earth Science Information Network http://sedac.ciesin.columbia.edu/gpw/lecz.jsp Download the excel, use variable G00PT_lecz for total population in LECZ and variableG00PT_ctry for total population. Note: They only updated these data until 2000 ? .

Calculation: Use the data from Columbia University and convert by using max
min procedure Notes: This is a newly introduced index from 2012 onwards. But this index doesnt really affect Lao PDR because Lao PDR is landlocked and doesnt have costal zones. NEW!!
Index on Share of population in LECZ for Lao=0

EVI -Exposure Index

3.1 Exposure Index - Summary

Size Location Population Remoteness Merchandise Export Concentration Share of Agriculture, Forestry, Fishery Share of population in Low Elevated Costal Zone (LECZ)

Economic Structure

Environment

EVI -Exposure Index

3.2.1 Instability of Exports (Trade Shock - Shock Index)

Rationale: Reflects the instability of export earnings, or the capacity of a country
to import goods and services from current export earnings

Calculation: Standard error of the regression of deflated export earnings on their

past values as well as on a trend variable.

EVI -Shock Index

3.2.1 Instability of Exports (Trade Shock - Shock Index)

Step 1: Obtain Data on : 1. Exports of Goods and Services (in Current US Dollar) UN Statistics National Accounts Main Aggregates Database http://unstats.un.org/unsd/snaama/
Data selection Basic data selection Select Country (Laos), Select Series (GDP by Expenditure, at current pricesUS Dollars), Select Year (1991-2010)

2. Import Unit Values, IMF International Financial Statistics (IFS) http://www.imf.org/external/data.htm and http://data.un.org
Import Unit Values are unfortunately not available for a sufficient number of countries. Therefore, UNCDP uses import unit values for Emerging and developing countries, not for each specific country. Lao doesnt have data available for import unit values at this point. Currently, IMF IFS database only has this data from 2008-2010 for free. One has to order from IMF for a full set of data. However, this data could also be accessed from UN database although its only updated to 2009.

EVI -Shock Index

3.2.1 Instability of Exports (Trade Shock - Shock Index)

Step 2: Compute Deflated Export Earnings
Xt = Value of Exports of Goods and Services/ Import Unit Values Deflated export earnings can be understood as the purchasing power of exports.

Step 3: Build the Regression

EVI -Shock Index

Using STATA
Import Data
Open Data Editor in the menu, click on start Past the data into the window Data Editor (Edit)

EVI -Shock Index

Analyze the Data(time-series):

tsset year * to tell STATA which variable you want to use for defining time in
time-series data analysis* Generate defl_exp_earning=export/importunitvalues *generate the new variable deflated export earning* generate Logdefl_exp_earning=Log(defl_exp_earning) * Log transformation of deflated export earning* Generate trend=_n Browse

*generate a time trend variable* *Browse to see how the data looks now*

What you will see in STATA command window:

What you will see in STATA data browsing window:

Run the regression and read the result

Regress Logdefl_exp_earning L. Logdefl_exp_earning trend, robust
*1st order autoregression of the log of the deflated export earning on its past values and the trend variable. * *L. Logdefl_exp_earning is the first lag of the variable Logdefl_exp_earning * *Robust means regression with robust standard error*

Standard Error of the Regression

3.2.1 Instability of Exports (Trade Shock - Shock Index)

Step 3: Convert by using Max-Min Procedure(Example of 2012 Review) UNCDP multiply the original standard error data by 100 to increase readability. Upper Bound(Max) Lower Bound(Min) Lao PDR 35.00 5.00 10.2

The higher the instability of exports, the larger the shock, use equation I = [(V-min)/(max-min)] x 100 , SE of Lao = 10.2 in this case Index for Instability of Exports = [(10.2-5)/(35-5)]*100=17.3

3.2.2.1 Victims of Natural Disasters (Natural Shock Shock Index)

Rationale: Reflects vulnerability to natural shocks, in particular the human
impact of natural disasters associated with these shocks. (The larger, the bigger the shock)

Definition: Victims are defined as people killed or affected (i.e., people requiring
immediate food, water, shelter, sanitation or medical assistance). It covers weather and climate-related disasters (such as floods, landslides, storms, droughts and extreme temperatures) as well as geo-physical disasters (such as earthquakes or volcanoes). Calculation: (Example of 2012Review) Average of the annual share of population killed or affected by a natural disaster

EVI -Shock Index

3.2.2.1 Victims of Natural Disasters (Natural Shock Shock Index)

Step 1: Obtain data on: 1. People killed or affected by natural disaster:
Emergency Disasters Data Base (EM-DAT) of the WHO Collaborating Centre for Research on the Epidemiology of Disasters (CRED) http://www.emdat.be/ Choose advanced search In step 1, select Laos under location, select years under timeframe rather than period (1991-2010 for 2012 review), select Climatalogical, Geophysical, Hydrophysical, and Meteorological as disastrous groups under disaster In step 2, Choose the last option. 1st round select Total number of Deaths by Disaster date and Country. 2nd round select Total number of Total Affected by Disaster date and Country.

Note: For those years that dont have data recorded, it doesnt mean data is missing. It means that theres no victims or deaths. So we will have to add those years back when calculating the average. 2. Total Population:
UN DESA Population Prospects Database, http://esa.un.org/unpd/wpp/index.htm Left hand side: Table in excel format Total population both sexes Estimates

EVI -Shock Index

 Step 2: Compute the average of the annual share of population killed or affected by a natural disaster

EVI -Shock Index

3.2.2.1 Victims of Natural Disasters (Natural Shock Shock Index)

Step 3: Converted into index number using max-min procedure Upper Bound(Max) Lower Bound(Min) 10 0.005 Lao PDR 4.296

The higher the percentage, the larger the shock index, use equation I = [(V-min)/(maxmin)] x 100 Index for Victims = [(ln4.296-ln0.005)/(ln10-ln0.005)]*100 = 88.9

Note: The victims indicator replaces the indicator homelessness caused by

natural disasters, which was used in the 2006 and 2009 reviews and did not cover the impacts of droughts and extreme temperatures. NEW!!

EVI -Shock Index

3.2.2.2 Instability of Agricultural Production (Natural Shock Shock Index)

Rationale: Reflects the vulnerability of countries to natural shocks, in particular
impacts of droughts and disturbances in rainfall patterns. (The higher, the larger the shock)

Calculation: Standard error of the regression of total agricultural production in

real terms on its past values as well as on a trend variable.

EVI -Shock Index

3.2.2.2 Instability of Agricultural Production (Natural Shock Shock Index)

Step1: Getting data from FAO (2012 Review Example) UNCDP uses Agricultural Production Indices to measure total agricultural production *What is FAOs Agricultural Production Indices?

Access: http://faostat.fao.org/site/612/default.aspx#ancor FAO STATS Production Production Indices Net Production Index Number, Agriculture (PIN) + Total, Year 1990-2009 (For 2012 Review, UNCDP accessed FAOs database on 23 August 2011 and by that time the 2010 data hadnt been updated to FAOs website yet. FAO recently updated the database to extend data to 2010 and may contain some data revisions on 2009 data values. )
EVI -Shock Index

EVI -Shock Index

3.2.2.2 Instability of Agricultural Production (Natural Shock Shock Index)

EVI -Shock Index

Using STATA
Import Data:
Click Data Editor in the menu, click start data editor (Edit) paste the data into the window.

EVI -Shock Index

Analyze the Data(time-series):

tsset year * to tell STATA which variable you want to use for defining time in
time-series data analysis* generate LogFAO=Log(Faoindice) * Log transformation of FAOs agricultural Indices* Generate trend=_n Browse

*generate a time trend variable* *Browse to see how the data looks now*

What you will see in STATA command window:

EVI -Shock Index

What you will see in STATA data browsing window:

EVI -Shock Index

EVI -Shock Index

Run the regression and read the result

Regress LogFao L.LaoFao trend, robust
*1st order autoregression of the log of the FAOs agricultural indices on its past values and the trend variable. * *L.logFao is the first lag of the variable LogFao* *Robust means regression with robust standard error*

Standard Error of the Regression

3.2.2.2 Instability of Agricultural Production (Natural Shock Shock Index)

Step 3: Convert into index by using max-min procedure (Example of 2012 Review) UNCDP multiply the original standard error data by 100 to increase readability. Upper Bound(Max) Lower Bound(Min) 20.00

Lao PDR 6.35

1.50

The higher the standard error, the more volatile is agriculture production, the larger the shock, use equation I= [(V-min)/(max-min)] x 100 , SE of Lao = 6.35 in this case Index for Instability of Agriculture = [(6.35-1.5)/(20-1.5)]*100 = 26.2

EVI -Shock Index

* Whats FAO Agriculture Production Indices?

The FAO indices of agricultural production show the relative level of the aggregate volume of agricultural production for each year in comparison with the base period 20042006.

1. 2. 3. 4.

Relative: base period 2004-2006 Volume: shows the aggregate volume of production each year. Price-weighted: Total quantities of different agricultural commodities produced are price-weighted, using 2004-2006 average international commodity prices Deduction of seed and feed: Seed and Feed are not included in the total quantities of agricultural commodities. The resulting aggregate represents, therefore, disposable production for any use except as seed and feed.

Equation:

EVI -Shock Index

3.2 Shock Index - Summary

Trade Shock Instability of Exports

Natural Shock

Victims of Natural Disaster Instability of Agricultural Production

EVI -Shock Index

3. EVI Final Index Calculation

Shock Index 37.4 Exposure Index 36.7

EVI for 2006 = 1/2 * (37.4+36.7) = 27.1 (in 2012)

3. EVI Graduation Threshold 2012

Graduation Threshold:
10% above the inclusion threshold Inclusion threshold: first quartile of the distribution comprising all countries in the reference group. (those who score in the highest75% are all included)

2012 LDC Review: 37.1

Inclusion threshold: 36 Graduation threshold: 32

Change over time-EVI 2009

Graduation threshold:38

Inclusion threshold: 42

2009 LDC Review:59.9

Change over time-EVI 2006

Inclusion threshold: 42

2006 LDC Review:57.9

Graduation threshold:38

Summary -1
GNI Per capita: Absolute Value HAI Index: Relative Composite Indices EVI Index: Relative Composite Indices

Summary - 2
Reference Group for Computing HAI & EVI:
All LDCs and those whose three-year GNI per capita income is less than 20% higher than low income threshold determined by WB

Note: Any country that has a population larger than 75

million is not included in LDC except those already on the list before 1991 and those whose population becomes larger than 75 million after joining the category

Summary of Equation Choice

2. HAI 2. HAI 2. HAI 2. HAI 3.1.1 EVI-Exposure Index (Size) 3.1.2 EVI-Exposure Index (Location) 3.1.3 EVI-Exposure Index (Economic Structure) 3.1.3 EVI-Exposure Index (Economic Structure) 3.1.4 EVI-Exposure Index (Environment) 3.2.1 EVI Shock Index (Trade Shock) 3.2.2 EVI Shock Index (Natural Shock) 3.2.2 EVI Shock Index (Natural Shock) 2.1 Percentage of population undernourished 2.2 Under-five mortality rate 2.3 Gross secondary enrollment rate 2.4 Adult Literacy Rate 3.1.1 Population 3.1.2 Remoteness 3.1.3.1 Merchandise Export Concentration 3.1.3.2 Share of Agriculture, Forestry, Fishery 3.1.4 Share of Population in Low Elevated Costal Zone 3.2.1 Instability of Exports 3.2.2.1 Victims of Natural Disasters 3.2.2.2 Instability of Agricultural Production the higher this component, the lower HAI the higher this component, the lower HAI the higher this component, the higher HAI. the higher this component, the higher HAI the higher this component, the less vulnerable, the lower EVI. the higher this component, the more vulnerable, the higher EVI. the higher this component, the more vulnerable, the higher EVI. the higher this component, the more vulnerable, the higher EVI. the higher this component, the more vulnerable, the higher EVI. the higher this component, the more vulnerable, the higher EVI. the higher this component, the more vulnerable, the higher EVI. the higher this component, the more vulnerable, the higher EVI. Use equation II Use equation II Use equation I Use equation I Use equation II Use equation I Use equation I Use equation I Use equation I Use equation I Use equation I Use equation I

Note
It is notable that to get the exact same number as UNCDP publishes for its triennial LDC review, one has to
Know the upper bound and lower bound set by UNCDP for each triennial review, this can be obtained from the LDC triennial review data (excel format) published by UNCDP once it finishes the triennial review http://www.un.org/en/development/desa/policy/cdp/ldc/ ldc_data.shtml Visit the according database at the same time UNCDP visited (databases such as FAO are frequently updated for modification of data quality). This information is usually published in the footnote of the LDC triennial review data (excel format). One can get from the same link above.

Useful Reference
2008 CDP Handbook on LDC (Detailed Explanations of Methodologies)at
http://www.un.org/esa/analysis/devplan/cdppublications/2008cdphandbook.pdf

2012 Addendum to CDP Handbook on LDC (Latest revision on EVI Index)at

http://www.un.org/en/development/desa/policy/cdp/cdp_publications/cdp_handb ook_addendum_jun2012.pdf

UN Stats Planet (Latest LDC Review Data in 2012) at

http://www.un.org/en/development/desa/policy/cdp/ldc/sp/ldc_data/web/StatPlan et.html

LDC Data Retrieval (Previous LDC Review Data in 2006 and 2009) at
http://www.un.org/en/development/desa/policy/cdp/ldc/ldc_data.shtml

UN DESA LDC Information Page at

http://www.un.org/en/development/desa/policy/cdp/ldc_info.shtml

Data Source
World Bank Data: http://data.worldbank.org/ UN Data: http://data.un.org/ UNESCO Institute for Statistics: http://www.uis.unesco.org FAO Food Security Statistics: http://www.fao.org/economic/ess/ess-fs/en/ FAO Agricultural Production Indices: http://faostat.fao.org/site/612/default.aspx#ancor UN DESA, World Population Prospects Database: http://esa.un.org/unpd/wpp/index.htm UN STATS, National Accounts Main Aggregates Database: http://unstats.un.org/unsd/snaama/ UNCTAD database: http://unctadstat.unctad.org/. Columbia University, CIESIN database http://sedac.ciesin.columbia.edu/gpw/lecz.jsp. CEPII Database on geographic distance http://www.cepii.fr/anglaisgraph/bdd/distances.htm WHO Emergency Disaster Database: http://www.emdat.be/,

Thank you! Kaup Jai Lai-Lai!