Policy Pathways Beyond the Shoreline

3. Classifying island economies

Abstract

Islands are diverse, ranging from large, populous regions to small, remote or bridged territories. This chapter examines how island regions are defined and classified in OECD and EU contexts and highlights the difficulties of capturing this diversity within a single harmonised framework. It reviews major international approaches, including Eurostat and OECD classifications at the NUTS 3 / Territorial Level 3, as well as national systems such as those used in Scotland and Croatia. To improve international comparability, the chapter introduces a hybrid typology that combines island and coastal classifications that distinguishes between metropolitan and non-metropolitan regions. The analysis concludes that more work is warranted to develop functional and flexible island definitions that are comparable across countries. This would support a better understanding of trends, opportunities and challenges in island regions and enable more effective policy responses.

Context and purpose and the challenge of definition

Understanding how to define and classify island economies is fundamental for designing effective territorial policies. Islands often face distinctive development challenges stemming from limited connectivity, restricted access to services, demographic pressures, and heightened exposure to climate risks. A consistent and flexible typology enables policymakers to evaluate these conditions comparably across countries, identify structural gaps, and tailor regional development interventions accordingly.

This section reviews existing approaches to defining islands, examines harmonised statistical frameworks developed by Eurostat and the OECD, and proposes a hybrid classification that integrates island and coastal typologies for cross-country analysis.

Defining what constitutes an island presents numerous conceptual and practical challenges. According to the Encyclopaedia Britannica, an island is defined as “any area of land smaller than a continent and entirely surrounded by water” (Britannica, 2022[1]). While several approaches to defining islands exist (e.g. some harmonised at regional levels across TL3 and NUTS31), developing a classification that allows for consistent cross-country comparison while reflecting islands’ own self-identified priorities remains a complex task.

While the definition of an island commonly refers to a single, discrete landmass surrounded by water, many island regions form part of archipelagos (e.g. clusters of islands that often function as integrated systems). These multi-island configurations add a further layer of complexity to definitions, as inter-island linkages (e.g. transport, labour markets, and service networks) may be as significant as connections to the mainland.

Within such archipelagos, patterns of double or multiple insularity, where smaller islands depend on one or more intermediary hubs to reach the mainland, should be explicitly captured in typologies and data systems, as they imply distinct accessibility gaps and policy needs.

Legal and geographic criteria also play an important role in differentiating types of islands. For example, the territorial sea, defined under international maritime law as 12 nautical miles (22.2 km) from the coastline, provides a useful threshold for distinguishing peri-continental islands (within the continental maritime influence zone) from open-ocean islands, which are more distant and often face greater connectivity and service challenges (Depraetere and Dahl, 2007[2]). Integrating such spatial criteria into island typologies can improve the precision of comparative analysis, especially when evaluating accessibility or exposure to maritime risks.

Once a territory satisfies the basic criterion of being surrounded by water at high tide, most definitions integrate additional parameters such as:

• proximity to continental landmasses (peri-continental versus open-ocean islands)

• population size or human presence, and

• administrative or functional association with other landmasses (island state versus island region)

These distinctions are summarised in Table 3.1 below.

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

Defining variable	Description	Definition	Caveats	Reference
Proximity to landmass	Legally defined coastal maritime zone	Distinguishes peri-continental from open-ocean islands	Includes uninhabited islands	(Depraetere and Dahl, 2007[2])
Association with other landmasses	An “island state” is a state composed entirely of island(s)	Differentiates island states, island nations or countries from island regions	Includes uninhabited islands and may overlook challenges related to distance	(Collins, 2022[3]) (WorldAtlas, 2022[4])
Population size	Definitions based on population thresholds: • Large > 50 000 inhabitants • Medium 5 000–50 000 • Small 50–5 000 • Very small < 50	Categorises islands as large, medium, small or very small	Based solely on population	(ESPON, 2013[5])
Population, surface and distance	Minimum area 1 km², = 1 km from mainland, > 50 inhabitants and no fixed link	Distinguishes islands from non-islands	Addresses habitation and proximity, but thresholds may not suit all contexts. Bridged islands and coastal regions with large island populations are considered non-islands	(Eurostat, 2018[6])

Note: ESPON further classifies regions as “performing,” “intermediate,” or “lagging” based on economic performance.

Classifying islands

Classifying islands according to their geographic, socio-economic and administrative characteristics enables meaningful comparison across different “types” of islands and supports the design of place-based policies. However, the effectiveness of any territorial definition ultimately depends on its policy relevance, which often requires balancing harmonisation with fitness for purpose.

This suggests that a mixed or hybrid approach may be most suitable when comparing multiple island regions. Each classification method, whether geographical, functional or statistical, has advantages and limitations; thus, the choice of typology should be guided by the priorities and perspectives of island communities themselves. Examples of context-specific island definitions are presented in Box 3.1.

Beyond geographic or administrative criteria, classification systems can incorporate industrial and economic characteristics, such as dependence on knowledge-intensive services, manufacturing, primary industries or tourism. Islands also differ in their accessibility and urban endowment, leading to distinctions such as:

• islands with independent urban systems (e.g. Sicily, Italy);

• islands within the influence area of mainland cities (e.g. Croatia’s coastal islands); and

• archipelagos or situations of double insularity (e.g. Gozo, Malta’s sister island; or parts of Greece where smaller islands depend on larger ones more than on the mainland).

In the latter two cases, critical policy questions arise regarding the capacity of markets to ensure access to essential services typically concentrated in urban areas, and to sustain labour markets extending beyond individual islands (ESPON, 2019[7]).

Beyond demographic or geographic dimensions, islands can also be differentiated by economic performance. The European Spatial Planning Observation Network (ESPON) classifies islands into “performing,” “intermediate,” and “lagging” categories based on their economic structure and outcomes (ESPON, 2013[5]). Performing islands are often larger, diversified territories combining strong sectors such as tourism, manufacturing or knowledge services. Intermediate islands tend to rely on a single dominant sector but show potential for diversification. Lagging islands, typically smaller or more remote, face limited economic prospects and resource constraints. These distinctions are valuable for understanding structural heterogeneity within island economies and for tailoring development policies accordingly.

Box 3.1. The definition of “island” in Scotland (UK) and Croatia

Scotland (UK)

The Islands (Scotland) Act 2018 provides official definitions of “island,” “inhabited island,” and “island community” as follows:

• Island: a naturally formed area of land that is (i) surrounded on all sides by the sea (excluding artificial links), and (ii) above water at high tide.

• Inhabited island: an island permanently inhabited by at least one individual.

• Island community: a community consisting of at least two persons who live permanently on the island and share common interests, identity, or geography.

Croatia

Croatia’s Islands Act 2018 establishes a comprehensive legal framework for island development and, together with the national Register of Islands, recognises all 1,244 islands, including small islands and islets below 1 km², some of which are inhabited, and classifies them by size, settlement patterns and administrative affiliation. Analytical work also differentiates between bridged and non-bridged islands and between coastal and more distant offshore islands.

The Eurostat definition of islands and integration with coastal classifications

The Eurostat definition of islands offers notable advantages for cross-country harmonisation. Under Eurostat criteria, a NUTS 3 island region consists entirely of one or more islands, or forms part of a larger island containing two or more NUTS 3 regions. Examples include Corsica (France), Crete (Greece), Sardinia (Italy), Sicily (Italy) and Gotland (Sweden).

This comparative basis goes beyond physical isolation, incorporating parameters such as size, minimum population and proximity to the mainland (Planistat & Dunbar, 2003[8]). However, if a region’s territory also includes mainland areas, it is not classified as an island region. Consequently, islands within mixed NUTS 3 regions, such as parts of Croatia, Estonia, Germany and Poland, are excluded from statistical island analyses.

Reliance on the NUTS 3 nomenclature has therefore excluded a significant number of islands from comparative datasets (Haase and Maier, 2021[9]). Several EU bodies, including the European Economic and Social Committee (EESC), have argued that the Eurostat criteria are overly restrictive and should be revised to allow more flexible and inclusive analysis (EESC, 2017[10]).

Key limitations of the current Eurostat framework include:

• Coastal islands (within 1 km of the mainland) may face similar challenges as more remote islands;

• Fixed links (bridges or tunnels) do not necessarily resolve island-specific challenges, as seen in the Isle of Skye (Scotland) or Pag and Krk (Croatia);

• Population thresholds may exclude small or depopulating island communities that face comparable socio-economic challenges.

For these reasons, a more flexible and integrated approach between island and coastal classifications is warranted to better capture functional realities.

Integrating island and coastal classifications for non-metropolitan regions

Some regions containing islands are officially classified as non-island regions because their administrative boundaries encompass large mainland areas. This creates analytical difficulties, as these mixed regions often combine distinct demographic and economic dynamics.

While imperfect, coastal classifications can provide valuable complementary insight by identifying regions where a significant share of the population resides on islands. Ideally, future analyses would rely on finer-grained definitions (e.g. at the municipal or grid-cell level) integrated with functional area delineations. Until such harmonised definitions are available, a hybrid approach combining fully island regions with coastal non-metropolitan regions offers a practical compromise.

Eurostat’s coastal typology at the NUTS 3 level defines coastal areas as follows:

• Regions with a sea border (coastal regions);

• regions where more than 50 % of the population lives within 50 km of the coastline (close-to-coast regions); and

• the special case of Hamburg; classified as coastal due to its maritime influence.

Formally, a NUTS 3 region is considered coastal if it:

• has a sea border;

• has more than 50 % of its population within 50 km of the coast (based on 1 km² population grid cells); or

• corresponds to the city of Hamburg (Germany), owing to its maritime character and inclusion of nearby islands (Neuwerk, Nigehörn, Scharhörn).

Under the first criterion, nearly all EU countries except Czechia, Luxembourg, Hungary, Austria and Slovakia have coastlines. The second criterion identifies regions without a coastline but with high coastal population density. The Hamburg exception illustrates how functional maritime characteristics may influence future typologies although it remains the sole case under current Eurostat methodology (Eurostat, 2024[11]).

Based on Eurostat’s classification, over one-third (36 %) of EU-28 NUTS 3 regions are considered coastal. These include 491 regions out of 1 348 (396 with a coastline and 95 close-to-coast) (Eurostat, 2024[11]).

To better capture regions that are both coastal and host significant island populations, this report adopts a hybrid territorial approach. It prioritises TL3 (NUTS 3) regions classified as islands and includes non-island coastal regions where at least 50 % of the population lives within 50 km of the coastline. Metropolitan regions are excluded to avoid over-representing large coastal agglomerations (e.g. Barcelona, Rome, Stockholm, Hamburg, Lisbon).

While a more detailed distinction (e.g. such as separating bridged and unbridged islands as in Croatia), would be ideal, the pragmatic classification used here maintains cross-country comparability. The regional typology employed throughout this report corresponds to the Island region type identified in Table 3.2.

Table 3.2. Definitions used for island regions

Islands classification (EC)	Number & share (2021)	Average regional GDP (million USD, PPP)	Coastal classification (EC)	Number & share (2021)	Average regional GDP (million USD, PPP)	Island region type (excluding metropolitan regions)	Number & share (2021)	Average regional GDP (million USD, PPP, 2021)
Island regions	47 (4 %)	8 000				Island regions	47 (4 %)	8 000
Non-island regions	1 038 (96 %)	16 000	Coastal regions with = 50 % population within 50 km of coast	280 (26 %)	14 000	Coastal and close-to-coast non-metropolitan regions	170 (16 %)	9 600
Coastal regions	44 (4 %)	19 000				Other regions (including metropolitan)	868 (80 %)	17 700
Non-coastal regions	761 (70 %)	15 000

Note: Average regional GDP is in millions of constant USD (PPP). Metropolitan regions are those classified under the OECD Regional Typology as metropolitan or non-metropolitan regions. For comparability, this classification excludes island nations (e.g. Malta, the United Kingdom, and Ireland) and non-European OECD countries (e.g. Norway and Switzerland).

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

This study acknowledges the complexities involved in the administrative classification of island economies into regional administrative units. It bases its classification on Eurostat's Nomenclature of Territorial Units for Statistics Level 3 (NUTS 3) definitions. NUTS 3 regions are small regions used for specific diagnoses and are part of a hierarchical system that divides the EU's territory into three levels: NUTS 1 (major socio-economic regions), NUTS 2 (basic regions for regional policies), and NUTS 3 (small regions for specific diagnoses). The OECD's Territorial Level 3 (TL3) builds on these same NUTS 3 definitions.

The OECD classifies region types into metropolitan and non-metropolitan regions. Metropolitan regions combine small (TL3) regions when 50% or more of the regional population live in a functional urban area (FUA) above 250 000 inhabitants and as “non-metropolitan” otherwise.¹

The classification for this process begins with prioritizing Island regions, followed by the integration of coastal regions and regions where at least 50% of the population lives within 50 kilometres of the coastline. The classification for Island regions² and Coastal regions³ are based on Eurostat definitions. Subsequently, all regions classified as “metropolitan regions” based on the OECD's typology are excluded to improve comparability. The resulting categories are:

• Island regions;

• coastal non-metropolitan regions (regions that are coastal or where at least 50% of the population lives within 50 km of the coastline); and

• all other regions.

The Coastal non-metropolitan regions are combined with those that are close to Coastal in the initial analysis, and separated in the more detailed country analysis section. All metropolitan regions are included in the category for all other regions.

Source: ¹ Adapted from: Fadic, M., et al. (2019), "Classifying small (TL3) regions based on metropolitan population, low density and remoteness", OECD Regional Development Working Papers, No. 2019/06, OECD Publishing, Paris, https://doi.org/10.1787/b902cc00-en.

² Eurostat (2024), Territorial typologies manual - coastal regions, https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Territorial_typologies_manual_-_coastal_regions#Classes_for_the_typology_and_their_conditions (accessed on 25 October 2024).

³ Eurostat (2018), Territorial typologies manual - island regions - Statistics Explained, https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Territorial_typologies_manual_-_island_regions (accessed on 12 May 2022).

Conclusions

The way islands are defined and classified is not merely a technical exercise. It is a policy choice that shapes how their needs, opportunities, and vulnerabilities are understood and addressed. As this chapter has demonstrated, definitions that fail to reflect the full diversity of island realities risk obscuring critical territorial dynamics, leading to misaligned or inequitable policy responses. Conversely, a clear, flexible, and functionally relevant typology is essential for evidence-based regional policy and for ensuring that island economies are properly represented in national and international analyses.

The evidence underscores that no single definition can fully capture the complexity of island regions. Islands vary widely in scale, population, connectivity, and economic structure; from large, urbanised islands such as Sicily or Crete to small, remote archipelagos and bridged islands closely tied to the mainland. Current frameworks, including Eurostat’s island typology at the NUTS 3 level, have provided a valuable statistical foundation for comparability across Europe. However, their rigidity often excludes smaller or mixed island–coastal regions that face similar socio-economic and service delivery challenges.

To address these gaps, the hybrid classification proposed in this chapter offers a more pragmatic approach, integrating island and coastal typologies while distinguishing between metropolitan and non-metropolitan regions. This framework balances harmonisation with local relevance. It recognises that functional realities, such as service access, transport connectivity, and labour-market integration, often transcend administrative boundaries, particularly in archipelagic contexts or regions where coastal and island communities are interdependent.

Several overarching insights emerge from this analysis:

• Definitions shape policy inclusion. Rigid typologies risk excluding smaller or functionally dependent islands from eligibility for regional or cohesion support. More adaptable frameworks can ensure that all communities with island characteristics are visible in data and policy.

• Functional integration matters as much as geography. The degree of isolation or connection by transport, digital links, or service networks, is often a stronger determinant of development outcomes than simple distance from the mainland.

• A hybrid, multi-scalar approach enhances policy design. Integrating island and coastal classifications, as proposed here, allows for the identification of shared challenges such as accessibility, economic dependency, and climate exposure across a broader range of territories.

• Statistical harmonisation should support, not constrain, place-based policy. Harmonised definitions enable comparability, but they must remain flexible enough to capture local specificities and evolving spatial realities, especially as infrastructure, population patterns, and administrative boundaries change.

Going forward, policymakers should focus on improving the analytical and operational value of island classifications. Key considerations include:

• Enhancing data granularity and interoperability. Develop harmonised, high-resolution island indicators, ideally at TL3 or municipal or grid levels, to capture inter-island differences and coastal linkages. Integrating functional area concepts. Use travel-to-work areas, service catchments, or commuting zones to reflect how island economies function within broader regional systems.

• Embedding economic and resilience dimensions. Classifications should incorporate variables such as sectoral dependency, innovation capacity, demographic trends, and climate vulnerability to better inform targeted interventions.

• Ensuring policy coherence across governance levels. EU, national, and regional authorities should co-ordinate to align definitions, eligibility criteria, and funding instruments, reducing fragmentation and improving policy targeting.

• Supporting inclusive participation. Involving island communities and regional administrations in shaping typological updates ensures that classifications reflect lived realities and foster ownership of policy outcomes.

Ultimately, the way islands are defined and classified has direct implications for how they are integrated into regional and national development strategies. A harmonised but context-sensitive typology enhances analytical comparability while ensuring that policy responses remain grounded in territorial realities. By embedding functional, economic, and resilience dimensions within statistical frameworks, policymakers can better identify structural constraints and design interventions that address them effectively. Recognising islands as distinctive but integral components of Europe’s territorial fabric, rather than exceptional cases, enables more coherent, equitable, and forward-looking regional policies. Such an approach is essential to strengthen connectivity, foster economic diversification, and build long-term resilience across all types of island regions.

References

[12] Baldacchino, G. (2007), A World of Islands: An Island Studies Reader., Agenda Academic (Malta) & Institute of Island Studies (Canada), 2007, http://islandstudies.com/publications/a-world-of-islands/.

[1] Britannica (2022), Encyclopedia Britannica, https://www.britannica.com/ (accessed on 1 June 2022).

[3] Collins (2022), Collins Online Dictionary | Definitions, Thesaurus and Translations, https://www.collinsdictionary.com/ (accessed on 12 May 2022).

[2] Depraetere, C. and A. Dahl (2007), “Island Locations and Classifications”.

[10] EESC (2017), “Official Journal of the European Union, European Economic and Social Committee on “The islands of the EU: from structural disadvantage to inclusive territory”, 2017 / C-209/02”, 2017/C 209/02.

[7] ESPON (2019), ESPON Bridges, Balanced Regional Development in areas with Geographic Specificities, 2019.

[5] ESPON (2013), The Development of Islands – European Islands and Cohesion Policy, 2013.

[11] Eurostat (2024), Territorial typologies manual - coastal regions, https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Territorial_typologies_manual_-_coastal_regions (accessed on 15 March 2025).

[6] Eurostat (2018), Territorial typologies manual - island regions - Statistics Explained, https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Territorial_typologies_manual_-_island_regions (accessed on 12 May 2022).

[9] Haase, D. and A. Maier (2021), “Islands of the European Union: State of play and future challenges Policy Department for Structural and Cohesion Policies Directorate-General for Internal Policies EN STUDY”.

[8] Planistat & Dunbar (2003), Planistat Europe and Bradley Dunbar, Analysis of the island regions and outermost regions of the European Union: Part I - The island regions and territories, 2003.

[4] WorldAtlas (2022), World Map / World Atlas / Atlas of the World Including Geography Facts and Flags - WorldAtlas.com, https://www.worldatlas.com/ (accessed on 13 December 2021).

Note

← 1.  The NUTS classification (Nomenclature of territorial units for statistics) is a hierarchical system for dividing the EU's territory to collect, develop and harmonise statistics on European regions. The NUTS classification has three main levels: major socio-economic regions within a Member State (NUTS 1); basic regions, for the application of regional policies (NUTS 2); and small regions, for more focused use (NUTS 3). References to Territorial Levels (TL 1, 2 or 3) are sometimes used for the purpose of extending beyond European regions but consist of the same administrative delineations as the NUTS classifications.