The Caribbean has significant development potential that requires scaling up investment – at greater speed and at greater scale. This second edition of the OECD-IDB Caribbean Development Dynamics report sets out how that can be done.
The region brings strong assets but also faces persistent constraints. Small market size, modest productivity, limited disaster resilience, and repeated external shocks – compounded by constrained fiscal space, high financing costs, and infrastructure and connectivity gaps – continue to hinder development. This challenge is well known, but it can be addressed.
The Caribbean is among the regions most exposed to climate and disaster risks, despite contributing little to global greenhouse gas emissions. This reality strengthens the case for an investment agenda centered on resilience and sustainability. The experiences of small, open economies in managing risk, financing resilience, and mobilising investment also provide valuable lessons for global development and financial systems.
The report presents three priority areas for policy action. First, regional integration and international partnerships are essential. Caribbean countries share vulnerabilities, but they also share opportunities to develop solutions. Deeper regional co-operation can amplify investment, reduce costs, strengthen institutions, and bring scale to projects that would be difficult to deliver individually. Platforms such as the IDB Group’s ONE Caribbean programme provide a practical framework for this co-operation – aligning priorities, strengthening pipelines, and mobilising public and private investment across countries.
Second, resilience must be embedded at the core of investment planning and decision-making. Resilient infrastructure, early warning systems, and well-designed public-private partnerships are essential to protect livelihoods, safeguard natural assets, and reduce long-term fiscal risks. Investments aligned with the Caribbean’s strengths – such as the blue economy, renewable energy, sustainable transport, and tourism – can support growth and long-term development.
Third, the scale of investment requires diversified financing sources. Domestic resource mobilisation, private-sector participation, and international capital flows all play key roles. Innovative instruments, including green, social, sustainability, sustainability-linked and blue bonds, debt-for-nature swaps, and climate-resilient debt clauses, are also reshaping how Caribbean countries finance development and manage risk. The IDB Group has participated in five of the ten most recent market-based debt swap operations, working with other multilateral development banks, private investors, and guarantors.
Building on that experience, the Caribbean multi-guarantor debt-for-resilience initiative aims to move from ad hoc transactions to a more structured approach. For its part, the OECD Development Centre, as it expands its engagement with the Caribbean region, can bring its broad expertise on development and provide a unique platform for policy dialogue, where Caribbean issues are discussed across members of its Governing Board. The OECD’s Strategic Framework for Latin America and the Caribbean provides a structured basis for advancing these efforts and deepening engagement across the full range of shared policy priorities.
Together with regional stakeholders and international partners, the OECD and the IDB Group remain firmly committed to supporting Caribbean countries as they advance their development agendas.
Mathias Cormann
Secretary-General
Organisation for Economic Co-operation and Development
Ilan Goldfajn
President
Inter-American Development Bank