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 $261 million in 2023, Marshall Islands is one of the smaller economies in the Pacific Islands, accounting for 0.6% of regional GDP. Marshall Islands has a population of 39,000, resulting in a GDP per capita of $6,509, ranking fifth among Pacific Island states. While Marshall Islands is classified as a microstate, the country’s exclusive economic zone (EEZ) spans 1.99 million square kilometres, the 19th-largest globally and comparable in size to the EEZ of Portugal.

Marshall Islands has the third-largest official development assistance (ODA) to gross domestic product (GDP) ratio in the Pacific Islands region, with aid accounting for 53% of GDP. In a global context, Marshall Islands remains among the most aid-reliant countries in the world, with its aid as a share of GDP ranking third among 125 developing countries. The Marshallese government’s development agenda is focused on improvements to the country’s human capital and infrastructure. At 0.733, Marshall Islands’ Human Development Index score ranks 108th out of 193 ranked countries.

Between 2008 and 2023, annual official development finance (ODF) disbursements to Marshall Islands — including grants, loans, and other forms of assistance — averaged $103 million. Less than 2% of the development finance received by Marshall Islands over the past 16 years came in the form of loans, among the lowest 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 (COFA). The vast majority (74%) of ODF support to the country in 2023 came from two development partners — the United States (60%) and the World Bank (14%). Marshall Islands sees one of the highest levels of donor concentration in the region.

Projects financed through the COFA dominate ODF project lists in Marshall Islands, with funding flowing to all sectors, with a particular focus on education, health, and infrastructure. In addition to US-financed projects, the World Bank’s Pacific Islands Regional Oceanscape Program represents a major new commitment of $18 million in support of sustainable management of Pacific fisheries.

ODF disbursements to Marshall Islands are somewhat distinct from regional trends in terms of sector distribution. ODF flows focused on government and civil society made up 47% of incoming support, which is higher than the regional average of 38%. Conversely, spending on transport, energy, and water and sanitation were below the regional averages. Marshall Islands is an outlier in the Pacific in that human development spending over 2008–23 consistently eclipsed spending on infrastructure. These differences are primarily a product of how the United States reports and directs its Compact support.

Since 2008, Marshall Islands has received $147 million in development financing with a “principal” focus on either climate adaptation or mitigation. Over this same period, the country has seen $90 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 made up 9% of total spending, slightly above the Pacific regional average. Conversely, spending on “significant” climate projects in Marshall Islands made up 5% of incoming funds, significantly below the regional average of 11%.

Between 2008 and 2023, Marshall Islands received $5 million in development financing with a “principal” focus on gender equality, and $86 million in development financing with a “significant” focus on gender equality. “Principal” gender equality financing constituted less than 1% of ODF received by the country, below the regional average of 2%. Similarly, “significant” marked gender financing made up 5% of incoming ODF, around a quarter of the regional average of 22%. The largest project directly targeting gender equality in Marshall Islands was the multi-year Pacific Women Shaping Pacific Development program, funded by Australia.