Marshall Islands

Key trends and development challenges

Marshall Islands is an atoll state located in the Pacific sub-region of Micronesia. With a GDP of $280 million in 2022, Marshall Islands is one of the smaller economies in the Pacific, accounting for 0.7% of regional GDP. Marshall Islands has a population of 42,000 (2022), resulting in a GDP per capita of $6,700, ranking fifth among Pacific Island states. While Marshall Islands is classified as a microstate, the country’s Exclusive Economic Zone (EEZ) covers 1.99 million square kilometres, the 19th-largest globally, and is comparable in size to the EEZ of Portugal.

Marshall Islands has the third-highest Official Development Assistance (ODA) to Gross National Income (GNI) ratio in the Pacific Islands region, with aid accounting for 47% of national income. The country holds the same rank globally, placed third among 127 developing countries, for its ODA/GNI ratio. The Marshallese government’s development agenda is focused on improvements to the country’s human capital and infrastructure. At 0.731, Marshall Islands’ Human Development Index score ranks 102nd out of 193 ranked countries.

Between 2008 and 2022, annual Official Development Finance (ODF) disbursements to Marshall Islands — including grants, loans, and other forms of assistance — averaged $97 million. Less than 2% of the development finance received by Marshall Islands over the past 15 years came in the form of loans, among the lowest level in the Pacific.

Development partners and sector trends

Marshall Islands has seen high variation in its annual ODF receipts since 2008. This volatility is largely a product of the lumpy disbursement of budget support packages from the United States, as part of the country’s Compact of Free Association agreement. The vast majority (78%) of ODF support to the country comes from two development partners, the United States (68%) and Japan (9%). Marshall Islands sees one of the highest levels of donor concentration in the region.

ODF disbursements to Marshall Islands are somewhat distinct from regional trends in terms of sector distribution. Projects focused on government and civil society make up 45% of incoming flows, which is higher compared to the regional average of 37%. Conversely, spending on transport and health are both below the regional averages. Marshall Islands is an outlier in the Pacific in that human development spending over the 2008–22 period has consistently eclipsed spending on infrastructure.

Since 2008, Marshall Islands has received $107 million in development financing with a “principal” focus on either climate adaptation or mitigation. Over this same period, the country has seen $50 million in development financing with a “significant” focus on climate outcomes. Since 2018, Marshall Islands has seen substantial growth in climate-targeting projects. As a share of total ODF received by Marshall Islands, “principal” climate projects make up 9% of total spending, matching the regional average. Conversely, spending on “significant” climate projects in Marshall Islands makes up 4% of incoming funds, significantly below the regional average of 13%.

Between 2008 and 2022, Marshall Islands received $5 million in development financing with a “principal” focus on gender equality, and $102 million in development financing with a “significant” focus on gender equality. “Principal” gender equality financing constituted 0.3% of ODF received by the country, below the regional average of 2%. Similarly, “significant” marked gender financing made up 8% of incoming ODF, close to a third of the regional average of 21%. The largest project directly targeting gender equality in Marshall Islands was the multi-year Pacific Women Shaping Pacific Development program, funded by Australia.