Working Paper
Vulnerability to Globalization in India

Relative Rankings of States Using Fuzzy Models

The net impact of globalization on developing countries, and more specifically on the poorer sections of population in these countries, is complex and context dependent, and hence needs to be analysed empirically. This study in the context of globalization attempts to develop regional level indices of vulnerability with respect to welfare loss in India using a methodology based on fuzzy inference systems. The vulnerability of an entity is conceptualized (following the practice in global climate change literature) as a function of its exposure, sensitivity and adaptive capacity. Empirical analysis based on such multidimensional conceptualization demands use of indicator-based approach which is attempted in this study and uses fuzzy models that adequately capture vagueness inherent in such approaches. The contribution of the study is three folds: conceptualization of vulnerability and linking it with formalization being attempted in other disciplines, development of a new methodology to measure vulnerability, and apply the methodology to rank Indian states in terms of their relative vulnerability to welfare loss. The economic reforms initiated in 1991 and set in motion a series of polices for trade liberalization in India. To capture the dynamic nature of vulnerability two time points representing ‘pre’ and ‘post’ reform period are chosen for analysis. The results show that vulnerability indices estimated are dynamic in the sense that an entity that is vulnerable today need not remain so in the next period and at the same time currently non-vulnerable may not enjoy that status in future.