The key to long term economic growth in Orkney is sustainable development across all sectors of the local economy according to local development chiefs.

Launching the ninth annual report of Orkney Enterprise, chairman Ken Watson highlighted new investments in the manufacturing, food and drink, and tourism sectors which have helped achieve long-lasting benefits for the local economy. He also highlighted how increased community activity is reaping huge benefits in some of the most remote communities.

Orkney Enterprise invested £716,400 (pounds) in a wide range of business projects over the year, helping to create or retain 168 full-time jobs and attracting an additional £2.3 million (pounds) from the private sector, which represents an investment of £3.20 for every £1 of assistance provided.

Ken Watson said: "Food and drink businesses received around half of the investment made in business development projects which underlines the importance of this sector to the Orkney economy. As the emphasis turns to new product development and fresh approaches to marketing, the food and drink sector will continue to offer new opportunities for local businesses to expand. Through our involvement in these developments, we also continued to build on the areas quality image which underpins development across all sectors of the economy."

One example of the innovative approach being adopted by local food and drink companies is the development of an organic salmon smolt hatchery at Rackwick in Hoy - assisted by Orkney Enterprise - to supply a Westray fish farm. This investment in new hatchery equipment will also enable trials to continue into the commercial production of Arctic charr - a UK first.

More businesses than ever before embraced Skillseekers - the national training programme for young people - which led to 61 vocational qualifications being achieved during the year against a target of 53. 66 per cent of youngsters on the Skillseekers programme were employed during their training - a 5 per cent increase on last year. The report also highlights a strong uptake of vocational qualifications in the food and drink sector.

A further 19 organisations, both in the business and voluntary sectors, were recognised as Investors in People, demonstrating their ongoing commitment to staff development.

Ken Grant, chief executive of Orkney Enterprise said: "Boosting local economies and improving the quality of life on several of Orkney's remoter islands are amongst our key priorities and it is pleasing to report on the growing number of our island and more rural communities which are beginning to enthusiastically progress their own plans for development."

Residents on Westray and Papa Westray are at the forefront of this revolution with the two island development trusts taking a pivotal role in identifying new projects. New developments include the recruitment of a development officer, the construction of three new business starter units at Pierowall on Westray and a craft and heritage trail which has helped make both Westray and Papa Westray more appealing tourist destinations. These projects have all received advice and financial assistance from Orkney Enterprise.

Ken Grant, added: "Strengthening communities is at the forefront of everything we do as a development agency. Communities are seizing the initiative themselves and this helps ensure our resources are focused on their priorities. Examples include the further expansion of outreach centres and increased community activity all over Orkney from the mainland to some of the smallest islands like North Ronaldsay, Eday and Papa Westray.

"A record 44 Community Action Grants worth nearly £62,000 (pounds) were approved towards a wide variety of projects - from sports and the arts to special events and the refurbishment of village halls. These were matched by over £280,000 (pounds) of fund raising by the community groups themselves, demonstrating their commitment and increased confidence."

Other key outputs in 1999-2000 include:

* 19 Investors in People recognitions;

* 95 per cent property occupancy rate;

* 166 starts on Skillseekers;

* 26 starts on Training for Work.