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Small Island Developing States - SIDS

 

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Small Island Developing States (SIDS) include some of the world’s smallest and most remote states in the world. They are a diverse group of countries, differing in terms of population size and densities, geographical spread and relative development progress. Yet, they share common challenges and vulnerabilities that prevent them from investing in resilient development and seriously hinder their growth prospects. These include: high exposure to natural disasters and climate change, high exposure to global economic shocks, small or unstable domestic revenues and limited borrowing opportunities.

 

The OECD provides statistical data and policy analysis on external finance to Small Island Developing States (SIDS) to enhance access to and quality of development co-operation, and to support the development of financial instruments and approaches that are tailored to countries’ specific circumstances and needs.

 

In view of the challenges facing SIDS, a Technical Advisory Group of SIDS, donors, and international organisations set up a new virtual Secretariat in 2021 to improve the effectiveness and impact of international cooperation targeting SIDS. This Secretariat, provided by the OECD/UN, is developing advisory guidance and shared principles on effective development co-operation in SIDS contexts.

Financing for SIDS

With small and remote economies, exposed to economic and natural shocks, SIDS are highly vulnerable developing countries. They suffer from low economic diversification (some are highly dependent on tourism, others are subject to fluctuations in the prices of the raw materials on which their economies depend); high dependence on remittances; debt stress situations, as well as volatility of private income flows. Furthermore, SIDS make up two thirds of the countries that suffer the highest relative losses – between 1% and 9% of their GDP each year – from natural disasters and are acutely vulnerable to the increasing impacts of climate change.

Key facts

  • Remittances represent the largest source of external financing to SIDS, reaching on average almost half of total external financing in 2018-19.
  • Official finance (ODF) shows a moderate but steady growth over 2012-19. In 2018-19, ODF to SIDS reached 23% of total external inflows.
  • The top three providers of ODF to SIDS in 2012-19 were, in descending order: Australia (mainly through ODA contributions to Pacific SIDS through governance and civil society projects), followed by the Inter-American Development Bank (mainly through OOF projects to LAC SIDS, both in infrastructure and social sectors), and by the United States (mainly through ODA interventions in social sectors in Haiti).
  • In 2012-19, transport/storage and communications lead ODF (concessional and non-concessional flows) investments in SIDS. Private financing mobilised to SIDS, on the other hand, mainly targets the industry sector.

 

Making Development Co-operation Work for Small Island Developing States

SIDS 2018 cover

Small Island Developing States (SIDS) stand at a critical juncture on their paths to sustainable development. Economic growth, human development and vulnerability indicators point to specific challenges facing SIDS, and suggest that new development solutions and approaches are needed to chart the course to prosperity for their people and their environments.

Building on a number of innovative sources of data, such as the OECD Surveys on Private Finance Mobilised and on Philanthropy, in addition to OECD DAC statistics and other sources, this report examines the financing for development resources – domestic and external – available to SIDS. It highlights innovative approaches and good practices that the international community could replicate, further develop, and scale up in order to make development co-operation work for SIDS, helping them set on a path of sustainable development.

Further reading

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