Economy
‘A differentiated approach must be given towards SIDSsmall island developing States (SIDS) were recognized as a distinct group of developing countries at the Earth Summit in Rio de Janeiro in June 1992.
More information on UNCTAD official page., taking into account their great vulnerabilities to external economic and environmental shocks as well as their great dependence on tourismTourism refers to the activity of visitors -—
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—-. International tourism expenditure is often approximated by the sum of travel services and transport of passengers, reported under balance of payments statistics (see Trade in services). Transport of passengers not considered, tourism represents a subset of travel, as some travelers, such as border-workers, travel for regular work, as they are holding employment contracts outside their usual residential environment. Activities of border-workers and similar travelers do not belong under tourism. -—
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—-, a sector devastated by the global pandemic.’– Mr. José Ulisses Correia e Silva, Prime Minister of Cabo Verde at the United Nations General Assembly New York, 26 September 2020
Year 2020 was unusually bleak from the economic point of view. SIDS1’ challenges due to the intensifying impacts of climate change and natural disasters were magnified by the economic impacts of the COVID-19Infectious disease caused by the strain of coronavirus SARS-CoV-2 discovered in December 2019. Coronaviruses are a large family of viruses which may cause illness in animals or humans. In humans, several coronaviruses are known to cause respiratory infections ranging from the common cold to more severe diseases such as Middle East Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS). The most recently discovered coronavirus causes a coronavirus disease called COVID-19. pandemic.
Many SIDS have developed a service economy around the ocean resources, tourism and business services. The collapse of tourism combined with high levels of external debtExternal debt is debt owed to nonresidents repayable in currency, goods, or services. -—
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—- defines it as outstanding amount of those actual current, and not contingent, liabilities that require payment(s) of principal and/or interest by the debtor at some point(s) in the future and that are owed to nonresidents by residents of an economy. are threatening livelihoods in many SIDS, including their capacity to achieve the 2030 Agenda for Sustainable Development.
This chapter will discuss SIDS’ economy, including:
- Economic trends by sector and vulnerabilities reflected by the volatility of GDPGross domestic product (GDP) and the current accountCurrent account, within the balance of payments, displays the transactions between residents and non-residents of a reporting economy, involving economic values, namely the cross-national exchange of goods and services as well as cross-national transfers of primary and secondary income -—
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—-. deficit. - Sustainable industrialisation and efforts to diversify economic activities and increase the share of high-tech manufactures.
- Productive capacities that build on SIDS’ human capital and enable higher economic growth and an increasing focus on service activities.
- Debt and financial risk related to the increasing indebtedness and the role of remittances, official development assistanceOfficial Development Assistance (ODA) are resource flows to countries and territories which are: (a) undertaken by the official sector; (b) with promotion of economic development and welfare as the main objective; (c) at concessional financial terms (implying a minimum grant element depending on the recipient country and the type of loan). In addition to financial flows, technical co-operation is also included -—
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—-. and foreign direct investmentForeign Direct Investment (FDI) is an investment involving a long-term relationship and reflecting a lasting interest and control by a resident entity in one economy (foreign direct investor or parent enterprise) in an enterprise resident in an economy other than that of the foreign direct investor (FDI enterprise or affiliate enterprise or foreign affiliate) -—
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—-. for SIDS’ economies.
- Aggregates for SIDS and SIDS regions in this chapter refer to the analytical SIDS grouping, as detailed in What makes a SIDS a SIDS, unless otherwise specified.