The purpose of this paper is to explore the e?ects of island status and country size on institutional quality, and to determine if these institutional e?ects can explain the relatively strong economic performance of islands and small countries. One of the main ?ndings of this paper is that the relationship between island status and institutional quality is signi?cantly positive, and that these results are robust to the inclusion of a number of control variables. Further, we ?nd that country size is negatively related to institutional quality, which is in keeping with previous results. Finally, using an instrumental variable method we demonstrate that when Rule of Law is included in regressions on levels of per capita GDP, the positive e?ects of small country size and island status disappear. These results provide further support for our hypothesis that institutions account for these countries’ relatively better economic performance.