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Title page 1

Contents 9

Foreword 4

Acknowledgements 5

Editorial 7

Abbreviations and acronyms 13

Executive summary 16

Overview 18

1. Main development dynamics and the role of investment 43

Unpacking macroeconomic dynamics and structural features in the Caribbean 45

Advancing social inclusion in the Caribbean: Tackling poverty, inequality and informality 53

Building resilience: Confronting environmental risks and climate vulnerabilities 59

Investment as a driver to unlock development potential in the Caribbean: Main trends and features 66

Key policy messages 79

References 80

Annex 1.A. Methodological annex 87

Annex 1.B. Empirical model to estimate the effect of FDI on the energy mix 88

2. Investment as a driver of sustainable and resilient development 89

Introduction 91

Investing in resilient development 91

Investing in sustainable development: Unlocking the potential of key sectors of opportunity 108

Key policy messages 138

Notes 139

References 140

3. Promoting better financing through enhanced resource mobilisation, innovative instruments and renewed partnerships 156

Introduction 158

Domestic resource mobilisation will be essential to finance the development agenda 158

Strengthening fiscal frameworks can help Caribbean countries cope with high debt levels 173

Private capital can be unlocked as a fundamental source of development financing 177

Development finance institutions are central to supporting resource mobilisation for sustainable development 183

New debt financing mechanisms can mobilise resources to support environmental, social and climate resilience objectives 187

Key policy messages 200

Notes 202

References 202

Tables 12

Table 2.1. Climate-resilient infrastructure projects in the Caribbean 94

Table 2.2. National Strategies for the Development of Statistics (NSDS) status: Selected Caribbean countries, 2025 105

Table 2.3. Experiences of the blue economy 110

Table 2.4. Experiences with Nature-based Solutions 115

Table 2.5. Experiences of sustainable tourism 117

Table 2.6. Experiences of creative industries 120

Table 2.7. Experiences of energy transition 122

Table 2.8. Experiences with sustainable transport 125

Table 2.9. Experiences of sustainable agriculture 128

Table 2.10. Experiences of the circular economy 130

Table 2.11. Experiences with digital transformation and AI 138

Table 3.1. Main features of CBI programmes in Caribbean countries, 2024 172

Table 3.2. NDBs in the Caribbean 183

Figures 10

Figure 1. Climate-related extreme weather events and GHG emissions in the Caribbean 19

Figure 2. Potential GDP per capita growth in the Caribbean, Latin America and advanced economies 20

Figure 3. Central government total public debt as a percentage of GDP, selected Caribbean countries and regional averages, 2014 and 2024 21

Figure 4. Trade basket composition in the Caribbean, 2024 and 2023 22

Figure 5. Monetary poverty in Caribbean countries, latest year available 23

Figure 6. Distribution of the population by household informality and welfare quintile, latest available year 24

Figure 7. Total investment in the Caribbean as a percentage of GDP, 2023 25

Figure 8. Foreign direct investment net inflows as a percentage of GDP, 2024 26

Figure 9. Greenfield FDI capital investment, number of projects and share by sector, 2014-2024 27

Figure 10. PPPs for infrastructure projects in the Caribbean and Latin America, 2010-2024 and Infrascope Index scores, 2023-2024 30

Figure 11. Tax structure in the Caribbean, OECD, Latin America and other SIDS, 2023 33

Figure 12. CIT incentives in selected Caribbean countries, 2025 34

Figure 13. Market capitalisation and stock turnover ratio in the Caribbean, 2024 or latest year available 35

Figure 14. GSSSB bond issuance in international markets in the Caribbean, 2019-2024 37

Figure 15. A generic multi-layered risk management strategy for natural disasters using pre-arranged financing instruments 39

Figure 1.1. Potential GDP per capita growth in the Caribbean, Latin America and advanced economies 45

Figure 1.2. Labour productivity in the Caribbean and Latin America as share of the OECD, 1991-2023 47

Figure 1.3. Central government total public debt as a percentage of GDP, selected Caribbean countries and regional averages, 2014 and 2024 48

Figure 1.4. Trade composition in the Caribbean as a percentage of GDP, 2023 49

Figure 1.5. Merchandise export composition of the Caribbean by economic profile and tech intensity, 2023 50

Figure 1.6. Services trade basket composition in the Caribbean, 2023 and 2024 52

Figure 1.7. Main destinations of Caribbean exports, 2022 or most recent year available 53

Figure 1.8. Monetary poverty in Caribbean countries, latest year available 54

Figure 1.9. Distribution of the population by household informality and welfare quintile, latest available year 56

Figure 1.10. Employment to population rate, by gender, Caribbean countries 57

Figure 1.11. Unemployment rate as a share of labour force, 2014, 2019 and 2024 58

Figure 1.12. Young people not in education, employment or training by gender, in selected Caribbean countries, 2024 59

Figure 1.13. Climate-related extreme weather events by type, selected Caribbean countries (1980-2024) 60

Figure 1.14. Vulnerability index: Caribbean, Latin America and OECD selected countries, 2023 61

Figure 1.15. GHG average emissions by region and sector, 2013 and 2023 62

Figure 1.16. Share of renewables in electricity generation, 2013 and 2023 64

Figure 1.17. Water stress and water use efficiency, 2012 and 2022 65

Figure 1.18. Total investment in the Caribbean as a percentage of GDP, 2023 67

Figure 1.19. Public investment in infrastructure in selected Caribbean countries as a percentage of GDP, 2015-2021 68

Figure 1.20. Private vs. public investment as a share of total investment in the Caribbean, Latin America and OECD, latest year available 70

Figure 1.21. Foreign direct investment net inflows as percentage of GDP, 2024 71

Figure 1.22. Greenfield FDI capital investment, number of projects and share by sector, 2014-2024 72

Figure 1.23. Origin of announced greenfield FDI projects in the Caribbean, 2014-2024 73

Figure 1.24. Number of jobs created by greenfield FDI in the Caribbean, 2014-2024 74

Figure 1.25. Relative difference between foreign and domestic firms' wages and shares of permanent employment, latest year available 75

Figure 1.26. Greenfield FDI in digital sectors in the Caribbean as share of total FDI, 2014-2024 76

Figure 1.27. Greenfield FDI in merchandise producing sectors, 2014-2024 77

Figure 1.28. Greenfield FDI in renewable energy: Capital investment, number of projects and share of total FDI by country, 2014-2024 78

Figure 1.29. FDI impact on renewable energy supply and the energy matrix in LAC 78

Figure 2.1. Infrastructure Vulnerability Index in the Caribbean and Latin America, 2023 92

Figure 2.2. PPPs for infrastructure projects in the Caribbean as a percentage of GDP, 2010-2024 97

Figure 2.3. Infrascope Index: Aggregate scores by category for Latin American and Caribbean economies, 2023-2024 98

Figure 2.4. Perception of government effectiveness in the Caribbean, 2023 102

Figure 2.5. Statistical Performance Indicator (SPI) overall score by region, 2023 103

Figure 2.6. Main regional and sub-regional organisations with Caribbean membership 106

Figure 2.7. Value of ocean goods and services exports per capita by development status groups, 2023 109

Figure 2.8. Total production and consumption of fish and seafood in the Caribbean, 2022 112

Figure 2.9. Share of aquaculture in total fish production, 1960-2022 113

Figure 2.10. Marine and terrestrial protected areas, 2014 and 2024 116

Figure 2.11. Creative services exports as percentage of total trade in services, 2024 119

Figure 2.12. The energy matrix in the Caribbean, 2024 121

Figure 2.13. Liner Shipping Connectivity Index, 2021 124

Figure 2.14. Progress towards productive and sustainable agriculture in the Caribbean, 2023 127

Figure 2.15. Composition of waste generation per capita in the Caribbean, 2024 129

Figure 2.16. GDP and productivity gains in Caribbean countries from closing digital infrastructure gaps with OECD Member economies... 132

Figure 2.17. Estimated broadband gaps relative to the OECD average 132

Figure 2.18. Estimated gaps relative to the OECD average, 2024 133

Figure 2.19. IDB Broadband Development Index: Scores and rankings of lead country and Caribbean countries, 2023 134

Figure 2.20. Digital affordability gap: Cost of data-only mobile-broadband basket and fixed-broadband basket, 2023 (percentage of GDP per capita) 135

Figure 2.21. Government AI Readiness Index (GAIRA), 2024, by pillar 136

Figure 2.22. Presence of computer science education in school curricula, Caribbean countries, 2024 137

Figure 3.1. Tax structure in the Caribbean, OECD, Latin America and other SIDS, 2023 159

Figure 3.2. Environmentally-related tax revenues by main tax base in Caribbean countries, 2023 161

Figure 3.3. CIT incentives in selected Caribbean countries, 2025 163

Figure 3.4. Tax officials' perceptions of the role of the tax administration, by region, 2024 167

Figure 3.5. Compliance issues facing tax administrations in Caribbean countries, 2024 168

Figure 3.6. Evaluation of tax administrations' key functions in Caribbean countries, 2024 169

Figure 3.7. Central government non-tax revenues in Caribbean countries, 2023 171

Figure 3.8. Debt service-to-tax revenues ratio, 2013 and 2023 173

Figure 3.9. External public debt: Share and composition by creditor in Caribbean countries 174

Figure 3.10. External public debt service in Caribbean countries, 2012-2023 175

Figure 3.11. Small states: Change in government debt around large natural disasters 177

Figure 3.12. Market capitalisation and stock turnover ratio in the Caribbean, 2024 or latest year available 178

Figure 3.13. Main external financial flows to the Caribbean, 2000-2024 179

Figure 3.14. Remittances and emigration in the Caribbean, 2024 181

Figure 3.15. Structure of a global credit loan by the IDB to the CDB 187

Figure 3.16. GSSSB bond issuance in international markets in the Caribbean, 2019-2024 189

Figure 3.17. A generic multi-layered risk management strategy for natural disasters using pre-arranged financing instruments 197

Figure 3.18. Jamaica's national natural disaster risk financing policy (by frequency and severity of natural disaster) 198

Figure 3.19. Sustainable finance framework development in the Caribbean, 2018-October 2025 200

Boxes 12

Box 1.1. Suriname: Poverty, human capital and skills for a sustained recovery 55

Box 1.2. Hurricane Melissa: Devastating impact in Jamaica (October 2025) 60

Box 1.3. Key policy messages 79

Box 2.1. Examples, of grey, nature-based and hybrid infrastructure solutions 93

Box 2.2. The IDB ONE Caribbean Project Preparation Coordination Mechanism (PPCM): Strengthening the pipeline of investment-ready projects 99

Box 2.3. IDB's resilient public-private partnership toolkit 101

Box 2.4. Strengthening Caribbean statistical systems: A tailored, sustainable approach 103

Box 2.5. Iceland Ocean Cluster 112

Box 2.6. Transforming sargassum into a development asset in the Caribbean 114

Box 2.7. Mangrove plantation in Viet Nam 115

Box 2.8. Impacts of nature-based tourism in Fiji, Madagascar and Lao PDR 118

Box 2.9. Creative industries in Mauritius: Dedicated incentives and programmes to support local entrepreneurship 120

Box 2.10. Extending electricity access in rural areas in Vanuatu using renewables 123

Box 2.11. Renewable energy for sustainable marine transport in Pacific SIDS 125

Box 2.12. An example of resilient agriculture in Pacific SIDS 128

Box 2.13. International circular initiatives to reduce food waste 131

Box 2.14. Key policy messages 139

Box 3.1. Caribbean Tax Outreach Programme 166

Box 3.2. Scaling development finance in the Caribbean: The Caribbean Development Bank's efforts to unlock capital for growth and resilience 185

Box 3.3. Innovative debt transactions for nature conservation and climate resilience in Barbados 190

Box 3.4. Carbon credits in Guyana: Using forests to generate revenue in exchange for protection and conservation 192

Box 3.5. The Contingent Credit Facility of the Inter-American Development Bank 195

Box 3.6. Key policy messages 200

Infographics 11

Infographic 1.1. The Caribbean faces a complex set of environmental and socio-economic challenges 44

Infographic 2.1. Investment should drive greater resilience and sustainability 90

Infographic 3.1. An ambitious regional investment agenda requires mobilising multiple sources of financing 157