Mediterranean islands heavily depend on tourism as their main economic resources. This development path has taken over from a poorly industrialized, agricultural society, and has insured economic integration to these islands. However, Mediterranean insular regions still suffer from a number of developmental issues leading to economic retardation vis-à-vis continental regions. Tourism has strengthened their peripheral status. Hainan, an insular province of China has experienced a similar situation. However, although tourism still remains a major economic resource for Hainan, new policies have been implemented to diversify the local economy and develop innovation-led activities on the island. Traditionally, peripheral regions are not considered as innovative regions because of several obstacles (e.g.: remoteness, social particularisms) (Soete, 1997). To be efficient, innovative policies should not only support technology and research, but also other economic aspects of the innovation process (Landabaso, 2003). Does it mean that decentralization is required to transform peripheral islands into innovative society? Or is the central government more likely to implement innovative policies? This paper will attempt to explore the several paths followed by Hainan to develop innovation, draw the limits of this policy, and question whether or not similar measures may be adopted by Mediterranean islands. The author argues that development of a private sector is the key factor for innovation in insular territories.