Development, as an idea and an industry, is premised on the assumption that all states have the ability to raise the material wellbeing of citizens. For many this appears to be working but the ideal is problematic for a sub-set of the world's smallest countries: the Pacific Island states. These states have sought to develop conventional export trade-based economies but are disadvantaged in this, and in service sector development, by a combination of well-known factors, including resource bases, size and location. By default, migration has become a least-worst development option for many island peoples and governments, involving engagement with the periphery and contributing to income generation and poverty alleviation. This deterritorialisation presents an alternative to mainstream development theory and practice in its current state-centric form, and emphasises the emerging significance of non-state approaches to development.