Why Island Economies are key drivers of Global Sustainable Development

Islands are facing more complex economic challenges to reach sustainable growth due to their size, remoteness and geoclimatic characteristics. Low demographics, high transportation costs, and the dominance of a small number of monopoly-like elite owned firms make these economies’ development even more reliant on innovative entrepreneurial initiatives than other territories (Baldacchino 2015). Whether in Small Island Developing states or Sub National Island Jurisdictions (read SNIJ), (Read 2010) growth is sluggish, artificially fed by government spending or focused on short term benefits by over exploitation of assets.

One of the two main recent perspectives on sustainable development carried by academics (Schaltegger and Wagner 2011) sees sustainability as one of the greatest business opportunities in the history of trade. If solving problems is the intrinsic drive of entrepreneurship and innovation, we should see dynamic pools of entrepreneurs in these territories working on tackling these structural, social and environmental hurdles, and abundant research focusing on these ecosystems.

Unfortunately, there is a general gap of knowledge in the literature about small island economies and most of all about innovation ecosystems within these territories. Local or internationally collected data about entrepreneurship is extremely hard to gather or extrapolate and no tools or models allow to efficiently measure, monitor and share capability in science, technology and innovation between island ecosystems. Relevant or recent research on islands economics is almost restricted to individual aspects of climate change resilience or static models which fail in covering the heterogeneity nor the differentiation potential of these small economies.

Indeed, islands need to concentrate resources on key competitive industries of areas of economic potential to compensate for they lack of economies of scale and limitation of resources. Most of all, specialisation could diminish the perception of neighboring islands as competitors and become the key enabler to enhanced collaboration.

Empirical surveys have depicted Island Economies as working in isolation from each other and of the global scene (Cashin and Loayza 1995), but as highly positively integrated with a patron state or metropolitan powers (Bertram and Karagedikli 2002). Nevertheless, the necessity of collaboration between Small dependent states or SIDS has started to appeal the interest of a wide range of stakeholders (The United Nations, The SIDS Partnership Platform, the European Commission) as well as to attract various tools of investments.

Despite this rising will to the multi-lateral collaboration potential of entrepreneurship ecosystems in islands to achieve sustainable development remains a relatively unchartered research topic.

Islands have been classified by scholars under various criteria: size, population, dependency or governance, economic development to better study a specific feature or phenomenon bonding these territories. In this article we want to focus on islands considered as Small Island Developing States (SIDS) and remote sub National Island jurisdictions (SNIJ) or small dependent island economies (SDIE), to be able to exploit the complementarity of their economic models and collaboration axis while covering their common intrinsic isolation, fragility and small size. Researchers are now improving their predictions and conclusions and insist that these economies have the potential to evolve from vulnerability to resilience and sustainable development, by diversifying production, producing quality “value” niche products while optimizing the use of resources (Briguglio et al. 2006; Boto & Biasca 2012; Haskins & Reid 2012).

The only path to sustainable development hence rests on the design of new technologies or business models able to leapfrog these economies and accelerate their global relevance (Prasad et al. 2013).

Some models have been developed by former literature (Stangler and Bell Masterson 2015; Aspen Network of Development Entrepreneurs 2013; Global Entrepreneurship Development Index 2013) to guide policy-makers and stakeholders in assessing, developing or nurturing their innovation ecosystem by tackling capacity building in specific areas as education, networks, culture and technology. More recent publications started highlighting the need to build a systems-based approach which allows to understand the interaction between individual-level actions and country-level framework (Acs, et al. 2016a). In fact, mapping these ecosystems allows to identify constraining factors and to allocate resources efficiently across the pillars of entrepreneurship (Acs, et al. 2016b).

If no specific model has been built to relevantly map small island innovation ecosystems, the European Union has worked in adapting a nationwide framework to build a Regional Entrepreneurship and Development Index which permits to identify a region (or small nation) ecosystem’s specific bottlenecks. This emphasis on a regional level occurred in a post crisis questioning of the European Economic model and led to the creation of a process of identification and exploitation of a region’s own competitive advantages, a “smart specialisation” strategy known as S3 (Foray et al. 2012; Smart Specialisation Platform 2014).

Because this regional differentiation program aims at enabling its adopters to reach critical mass to face international competition, to concentrate regional resources and to reach a relevant position in the global value chain, it constitutes a real opportunity for governments or scholars to develop relevant models for small islands’ sustainable development. At the time of this proposal, it has been successfully applied to 3 French SNIJs: namely Guadeloupe, Martinique and Reunion Island (Nexa Reunion 2016, Technopolis Guadeloupe 2014), the latter which will be included in this article model’s sample.

I built the following diagram to highlight Reunion and Mauritius’ ecosystems complementarities through the Regional Entrepreneurship and Development index model, inspired by Chad Renando (2017)’s proposal of REDI’s model visualisation.

Differentiating small island economies is more than just a way to thrive on comparative advantages, it is also a door to an enhanced cooperation with neighbouring insular territories and can be used as a tool to reach regional integration. Indeed, the complementarity of many of these island economies is hidden under inefficient competition in the same value chain position of historical industries or sectors (Briguglio, Persaud and Stern, 2006).

In addition, these intra-islands partnerships will allow to take advantage of bilateral relationships with countries in the global core (Bertram, 2004) that these territories inherited from or developed from historical, geostrategic or political reasons. One of the first and most renowned empirical studies of growth in island economies published by the IMF (Cashin, Loayza, 1995) validated the assumption that island economies operate largely in isolation from each other on the periphery of the global system but are showing a strong bond to metropolitan “patron economies” (Bertram 1992; Poirine 1999; Mc Elroy and Mahoney, 2002).

I tried to illustrate my vision for a quadripartite integration model for Reunion, Mauritius, Africa and Europe’s entrepreneurship ecosystems to accelerate innovation, leapfrogging and reach sustainable development, as an example of expectations built from my own experience of the Reunionese and Mauritian innovation ecosystems. I believe that these models must be co built between all stakeholders, must stay dynamic and opportunistic, and that the cooperative design process and transnational sharing could even highlight new surprising synergies to exploit.

Entrepreneurship ecosystems experience numerous bottlenecks such as lack of funding, poor protection of Intellectual Property or skills shortage which cannot be addressed simultaneously. However, island policy makers can take advantage of their complementarity and of preferential relationships to catalyse innovation towards inclusive and sustainable development.

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