The Balearic Islands heads Spain in terms of its people’s living standards, and in terms of per capita productivity is 15% higher than the European Union average. Although the increase in labor productivity has been one of the pillars on which the increase in income per capita has been based, the increase in employment has also contributed to the growth in output. The improvements achieved in technology and greater productive capital resources made available for each worker have been the two decisive factors for the growth in labor productivity. There are however weaknesses in the balance of the sector: a tourism monoculture and in the deterioration of the natural environment, which in the medium term could endanger the sustained development of the Balearic Islands. The work is part of the framework of collaboration between the BBV Foundation and the Valencian Institute for Economic Research (IVIE) to study the regional Spanish economy.