Adaptive capacity or national competitiveness - a false choice?

Adaptive capacity or national competitiveness - a false choice?

The objective of this research project is to develop an analytical approach how investments into adaptive capacity can simultaneously enhance the competitive foundation of countries. To measure a nation's ability to adapt to climate change, the first global Adaptive Capacity Index will be developed. It will be correlated with development of national competiveness as measured by Global Competitiveness Index (GCI). The results will allow to identify countries which built their adaptive capacity and also improved competitiveness simultaneously for further academic study.

Adaptive Capacity to Climate Change:

As one of the most vulnerable regions in the world, Southeast Asia is likely to suffer more from climate change than the global average due to its long coastlines, high concentration of population, economic activity in coastal areas and heavy reliance on agriculture, natural resources and forestry (ADB, 2009). As a result, the region needs to adapt to a changing climate. IPCC defines adaptive capacity as the potential, capability or ability of a system to adapt to climate change stimuli or their effects or impacts. Six general determinants of adaptive capacity have been defined (economic wealth, technology, information and skills, infrastructure, institutions and equity) – an operational framework for measuring and comparing adaptive capacity of countries however is lacking.

National Competitiveness:

National economic competitiveness is a well defined concept, evaluating a nation's microeconomic and macroeconomic fundamentals. The Global Competitiveness Index (GCI) published by the World Economic Forum allows cross country comparison of national competitiveness. 12 pillars of competitiveness are defined and divided into three broad categories: Basic Requirements, Efficiency Enhancers, Innovation and Sophistication Factors. These pillars are partially overlapping with the IPCC dimensions of adaptive capacity.

Research Question and the Methodology:

Research question is framed as: "Are investments into building Climate Change Adaptation Capacity Made at the Expense of Enhancing National Competitiveness or is this a false choice?" Any explicit linkage between national competitiveness and climate change adaptive capacity has not been evaluated yet by in-depth country study. In addition, policy makers are facing challenges in justification of their investment decision into adaptive capacity when questioned about the opportunity cost of such investment into other strategic areas to drive national economic growth and competitiveness. Therefore, the research question is to be explored against the reality of decision making dilemma by a series of case studies into individual countries. The research is conducted combining both qualitative and quantitative approaches. To develop a quantitative assessment for measuring adaptive capacity at a country level, a comprehensive literature review will be firstly conducted followed with statistical methods to construct a robust national adaptive capacity index for global countries. For each country, national adaptive capacity is then compared with national competitiveness measured by existing Global Competitiveness Index (GCI) within the same time span for identification of 3-5 countries which has demonstrated an improvement simultaneously on both adaptive capacity and competitiveness for future case studies.

Significance and Contribution of this Research

The findings of this research are significant as it contributes to both the existing academic literature and to policy decision making for global countries in response to climate change. The Adaptive Capacity Index developed in this research will be the first metric based index which can be used to evaluate the national capacity for adaptation to future climate-related disaster risks for all the countries globally. In practice, the research findings might suggest that countries can build national adaptive capacity and enhance competitiveness/economic growth simultaneously, which will provide a new perspective for policy decision makers. In particular developing nations in Southeast Asia and Least Developed Countries (LDCs) will benefit from this insight, as adaptation, poverty reduction and economic development are challenges that are existing simultaneously. Future research on country case studies can help to develop roadmaps how countries can improve both adaptive capacity and economic competitiveness.

For more information on this project, please contact Dr. Li DING at dingli@ntu.edu.sg or Lucas Neo at lklneo@ntu.edu.sg.