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 $285 million in 2024, Marshall Islands is one of the smaller economies in the Pacific, accounting for 0.7% of regional GDP. Marshall Islands has a population of 38,182, resulting in a GDP per capita of $7,464 — 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 GDP ratio in the Pacific, 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. At 0.733, Marshall Islands’ Human Development Index score ranks 108th out of 193 ranked countries.

The Marshallese government’s development agenda is focused on improvements to the country’s human capital and infrastructure. After two years of contraction, the economy returned to growth in FY2024, estimated at 3%, driven by a strong rebound in the fisheries sector. In March 2024, the United States approved a renewed 20-year Compact of Free Association (COFA), providing Marshall Islands with around $2.3 billion in economic assistance and trust fund contributions over 2024–43.

Between 2008 and 2024, annual official development finance (ODF) disbursements to Marshall Islands — including grants, loans, and other forms of assistance — averaged $110 million. Less than 2% of the development finance received by Marshall Islands over the past 17 years came in the form of loans.

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 COFA agreement. Between 2008 and 2024, the vast majority of ODF support to the country came from its largest development partners, led by the United States (65%), Japan (9%), the World Bank (6%), Taiwan (5%), and the Asian Development Bank (4%). Marshall Islands sees one of the highest levels of donor concentration in the region.

Projects financed through the COFA dominate ODF in Marshall Islands, with funding primarily flowing to education, health, and infrastructure initiatives. 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 48% of incoming support, which is higher than the regional average of 38%. Conversely, spending on transport, energy, and water and sanitation was below the regional averages. Marshall Islands is an outlier in the Pacific in that human development spending over 2008–24 consistently eclipsed spending on infrastructure. These differences are mostly a product of how the United States reports and directs its Compact support.

Since 2008, Marshall Islands has received $134 million in development financing with a “principal” focus on either climate adaptation or mitigation. Over this same period, the country has seen $134 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 7% of total spending, just below the regional average of 8%. Spending on “significant” climate projects in Marshall Islands also made up 7% of incoming funds, however this is significantly below the regional average of 17%.

Between 2008 and 2024, Marshall Islands received $7 million in development financing with a “principal” focus on gender equality, and $148 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%. “Significant” marked gender financing made up 8% of incoming ODF, around a third of the regional average of 23%. The largest project directly targeting gender equality in Marshall Islands was the multi-year Pacific Women Shaping Pacific Development program, funded by Australia.