The Caribbean has unique potential for sustainable development, including in renewable energy, the blue economy, and sustainable tourism and transport. But seizing these opportunities requires bold policy reforms. Caribbean Development Dynamics (CDD), a new annual flagship report co-published by the OECD Development Centre and the Inter-American Development Bank, provides policy recommendations at local, regional and international levels. The 2025 edition highlights initiatives across the Caribbean to diversify economies, improve climate resilience, and create formal jobs. It underscores the need for greater regional cooperation to address challenges around transport, digital access, and disaster-risk mitigation. The report also shows how stronger partnerships can amplify the Caribbean's voice on the global stage. The CDD reflects the OECD’s growing engagement with the Caribbean.
Caribbean development strategies
As well as shared geography, Caribbean countries have common characteristics in terms of economic assets and structures, social challenges, institutional frameworks, and environmental risks or opportunities. The OECD provides Caribbean policy makers with evidence-based, regional and national analysis, to help them monitor economic trends, learn from each other and craft innovative solutions to the challenges of sustainable development.
Key messages
Caribbean economies are highly exposed to natural disasters, climate change and global economic shocks, with narrow economic bases, small or unstable domestic revenues, and limited borrowing opportunities. Mobilising the necessary finance for their sustainable development thus requires balancing policy reforms aimed at economic diversification, more foreign investment and higher tax revenues with the smart use of international development finance.
Government revenue is the primary source of development finance for any country, and an essential component of the social contract. In the Caribbean, many economies are facing the challenges of increasing revenue while streamlining tax incentives and improving transparency. The OECD works with financial and tax administrations in the Caribbean to create databases of trusted, comparable data, improve collection and combat avoidance.
Context
Building climate resilience and harnessing the potential of natural endowments
The Caribbean is highly exposed to climate impacts, despite its limited contribution to global greenhouse emissions. Climate-related extreme weather events in the region increased by 85% in 2001-20 compared to 1980-2000. Natural disasters cost an annual average of 2.13% of regional GDP from 1980 to 2020. The region needs ambitious adaptation measures, resilient infrastructure, and strong early warning systems. The Caribbean’s rich biodiversity and natural endowments – including almost 10% of the world’s coral reefs, and around 45% and 25% of its fish and coral species, respectively – can drive new activities in renewable energy, sustainable tourism and transport, the blue and circular economy, and nature-based solutions.
Increasing the value added rather than volume of Caribbean tourism
Most countries in the Eastern Caribbean already welcome large numbers of tourists every year. Attracting more of them could lead to further pollution, loss of natural habitat, and disruption for local communities. To increase tourism receipts while protecting natural resources, improving existing services is therefore preferable to simply attracting more visitors. As the Figure below shows, value-added levels in tourism are noticeably lower in the Eastern Caribbean than in other, similar economies: there is therefore scope to increase the relative value-added for each tourist arrival. Leveraging the well-developed service sector could increase receipts per visitor, by better meeting the demands of cruise-ship passengers, attracting new tourist segments, and building more consistent hospitality experiences through certifications and training programmes.
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