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Title page 1

Contents 6

Foreword 4

Acknowledgements 5

Abbreviations and acronyms 9

Executive summary 10

1. Assessment and recommendations 12

Assessment 13

Policy implications 20

Recommendations 22

2. Features and characteristics of island economies 29

Territorial and economic characteristics of islands 30

Main challenges and opportunities for islands 33

Conclusions 36

References 37

3. Classifying island economies 39

Context and purpose and the challenge of definition 40

Classifying islands 41

The Eurostat definition of islands and integration with coastal classifications 42

Integrating island and coastal classifications for non-metropolitan regions 43

Conclusions 45

References 46

Note 47

4. Socio-economic trends of islands 48

Demographic and economic trends 49

Labour productivity and sectoral performance 52

Small firms and entrepreneurial density 59

Conclusions 61

Notes 62

5. Estimating the cost of insularity 64

Introduction: Addressing the cost of insularity 65

Conceptual and analytical framework for measuring the cost of Insularity 65

Methodological approaches and data for measuring the cost of insularity 68

Empirical evidence on the cost of insularity 70

Conclusions 73

6. Leveraging island assets to boost development and deliver well-being 76

Introduction 77

A place-based approach for island development 77

Innovation and smart specialisation 81

Sustainable and circular economies 85

Empowering people, culture, and communities 90

Connectivity, governance, and partnerships 92

Conclusions 95

References 97

7. Country perspectives: Case studies of Croatia, Greece and Sweden 99

Introduction 100

Socio economic diagnostic of case study regions in Croatia, Greece and Sweden 100

Governance and policy approaches: Croatia, Greece and Sweden 103

Conclusions 106

8. Strengthening multi-level governance for island development 107

Introduction: Governance as the bridge between geography and opportunity 108

Diagnosing the governance challenge in island economies 108

Country pathways: Institutional architectures and reform experiences 109

Emerging good practices and governance innovations 110

A framework for island-sensitive multilevel governance 111

From framework to practice: Strategic policy directions for islands 111

Strategic cross-cutting agendas 113

Conclusions 114

Reference 114

Tables 7

Table 2.1. Structural characteristics of islands and associated socio-economic implications 33

Table 2.2. Challenges and opportunities facing island economies and indicative policy priorities 35

Table 3.1. A selection of definitions and caveats in island classifications 40

Table 3.2. Definitions used for island regions 44

Table 5.1. Analytical options for measuring insularity costs 68

Table 5.2. Comparative Insights and Policy Relevance 72

Table 5.3. Shared challenges and policy priorities 74

Table 6.1. Characteristics of effective place-based regional policy 80

Table 7.1. Comparative institutional lessons: Croatia, Greece, Sweden 104

Table 8.1. A framework for island-sensitive multilevel governance 111

Figures 7

Figure 4.1. Population and Population growth, by Island region type 49

Figure 4.2. Population-weighted average GDP and GDP growth, by Island region type 50

Figure 4.3. Aggregate GDP per capita and GDP per capita growth, by Island region type 51

Figure 4.4. Aggregate Labour Productivity and Labour Productivity growth, by Island type 52

Figure 4.5. Levels and growth of Employment and Gross Value Added 53

Figure 4.6. Sectoral labour productivity (2001 & 2021) 54

Figure 4.7. Sectoral Labour Productivity Growth 55

Figure 4.8. Employment shares by Island region (2021) 56

Figure 4.9. Annual Employment growth in Island regions 57

Figure 4.10. Gross Value-added shares by Island region (2021) 58

Figure 4.11. Annual Gross Value-Added growth in Island regions (2001-2021) 59

Figure 4.12. Share of Firms and Employees, by firm size (2021) 60

Figure 4.13. Number of Firms per population, by firm size (2021) 61

Boxes 8

Box 2.1. The long-term effects of COVID-19 on island economies 36

Box 3.1. The definition of "island" in Scotland (UK) and Croatia 42

Box 3.2. Integrated classifications of island and non-metropolitan coastal regions 44

Box 6.1. Characteristics of an enabling environment for innovation 84

Box 6.2. Islands and the bioeconomy 87

Box 6.3. The co-operative model in Trentino (Italy) 88

Box 6.4. Managing tourism development for sustainable and inclusive recovery from COVID-19 90

Box 6.5. The Smart Islands Initiative 94

Box 6.6. Examples of island networks 95

Box 8.1. Island-proofing of new legislation in Scotland, UK 113

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