Assessment of Vulnerabilities in the Real Sector of European Economies

Abstract

The assessment of economic vulnerability is a key tool for analyzing the stability and resilience of the real sector of national economies, particularly in the context of global economic transformations and external shocks. This article proposes an approach to evaluating the economic vulnerability of the real sector in European countries, taking into account factors such as industrial development, macroeconomic indicators, and employment levels. A comprehensive methodology is introduced, combining the Entropy Weight Method (EWM) to determine indicator significance with a sensitivity and adaptability framework for measuring economic vulnerability. The study analyzes major macroeconomic indicators, including GDP growth rates, inflation, unemployment, and savings levels. Structural vulnerability of the real sector is assessed using statistical data from 2000 to 2023, and a Real Sector Vulnerability Index is developed based on data from the World Bank’s economic development indicators. The findings reveal significant regional disparities: countries in Northern and Western Europe exhibit lower levels of vulnerability due to balanced industrial structures and effective economic policies, while countries in Eastern and Southern Europe display greater sensitivity to economic shocks, reflecting structural imbalances. The methodology is based on econometric modeling tools and utilizes Python-based data analysis packages to explore dynamic relationships between macroeconomic variables over time. The results indicate that countries with diversified economic bases tend to demonstrate higher resilience, whereas economies with limited industrial diversification remain more susceptible to external risks. The proposed approach enhances the methodological foundation for evaluating economic vulnerability and provides a basis for informed policy decisions aimed at strengthening the resilience of the real sector under conditions of economic instability. The insights gained are of critical importance for policymakers in identifying and mitigating risk factors, thereby contributing to sustainable economic development across European regions.