Unleashing the potential of Caribbean countries requires addressing the region’s vulnerability to climate change impacts, boosting regional integration and enhancing access to financing, says Caribbean Development Dynamics 2025, the first edition of a new report presented today in Bridgetown, Barbados, in the presence of Prime Minister Mia Mottley.
According to this joint report by the OECD Development Centre and the Inter-American Development Bank, the region’s significant assets provide a solid basis for more sustainable development, its rich biodiversity – the Caribbean hosts almost 10% of the world’s coral reefs and around 45% and 25% of the fish and coral species, respectively – being one example.
However, as small island nations, Caribbean countries face specific environmental, social and economic vulnerabilities. Investing in resilience can help mitigate large socio-economic costs of climate events in the region, which amount to 2.13% of GDP annually (on average between 1980-2020) and affected 24 million people over that period. The number of extreme weather events in the Caribbean increased by 85% from 2001 to 2020 compared to 1980-2000.
The well-being of the average Caribbean citizen has improved in the last three decades, yet almost one in four people are poor, and food insecurity affects 37% of the population on average, a higher share than the Latin American average of 33%. On average, 47.2% of workers in the region hold informal jobs and 34.1% of the total population lives in completely informal households. The report also calls for special efforts to address the many obstacles faced by women in the Caribbean, from gender-based violence to unequal pay and limited access to education and health care.
Potential economic growth – at around 1.4% – is relatively low and declining, with labour productivity standing at 46% of the OECD level in 2023. Despite significant consolidation efforts underway in several countries, central government public debt represented 78.8% of GDP on average in 2022, well above the Latin American average (52.9%). Meanwhile, tax revenues as a share of GDP represent on average 21%, below the Latin American (22.4%) and OECD (34%) averages, and the average debt service-to- tax revenue ratio reached 12.9% in 2022.
The region’s participation in world exports has been decreasing to 0.23%, and intra-regional trade is still limited (6.7%). Transport connectivity is a prominent issue, with logistics weighing heavily on costs (16-26% of GDP, well above the OECD average of 9%). Finally, diversification remains a challenge, with 52.5% of exports consisting of primary products and resource-based manufactures, against only 4.1% for high-tech goods.
In this context, Caribbean Development Dynamics 2025 calls for policy actions in key strategic areas with the potential to unlock the region's development opportunities:
Enhance sectors with high development potential: the blue economy, renewable energy, sustainable tourism and transport, the circular economy, and nature-based solutions.
Harness the potential of innovative debt instruments – which the Caribbean has been spearheading – to channel resources towards social, green and blue development goals. Debt-for-nature swaps, for instance, can advance environmental goals while reducing debt. The first ever climate-resilient debt clause in the world has been activated in the Caribbean.
Invest in resilient infrastructure, early warning systems and climate adaptation policy instruments, in order to address high exposure to climate threats, align national adaptation commitments with international targets and examine trade-offs with sectoral and non-climate policies.
Maintain efforts to consolidate fiscal sustainability and unlock fiscal space: improve taxation systems to make them more progressive through relatively higher revenues from direct taxes; rationalise inefficient tax expenditures; and address tax avoidance in line with international agreements.
Leverage the region’s diversity through enhanced regional co-operation, to deepen trade integration, increase transport and digital connectivity, and reduce disaster risk. Lowering non-tariff barriers, addressing logistics costs and developing the potential of maritime transport are key priorities.
The report focuses its analysis on 15 Caribbean countries: Antigua and Barbuda, Barbados, the Bahamas, Belize, Dominica, the Dominican Republic, Grenada, Guyana, Haiti, Jamaica, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Suriname, and Trinidad and Tobago. To provide a comparative perspective, these Caribbean economies are analysed alongside the Latin America and OECD averages throughout the report. Additionally, when relevant, the analysis incorporates the perspective of the “Greater Caribbean”, including other countries and territories located in the Caribbean basin.
More information about the report: https://brnw.ch/cdd2024. Follow the launch on social media at #CaribbeanDevelopmentDynamics.
Press contacts:
- OECD Development Centre: bochra.kriout@oecd.org; Tel: +33 (0)1 45 24 82 96
- IDB: geraldineg@iadb.org; Tel: +1 (202) 623 1172
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