Eden Court has benefited from investment

They point to the area's population growth, higher than average earnings and low unemployment.

William Roe, chairman of Highlands and Islands Enterprise, also said HIE had invested �107m in the local economy - �15m of that on major projects.

His comments came as the agency announced its performance against targets for the financial year 2005-06.

The agency has a 20-year vision for a long-term sustainable Highland economy and Mr Roe said the region had taken huge strides towards realising that.

'Historic low'

He said: "Population has grown throughout our area, average earnings have increased and unemployment continues to be at a historic low.

"The University of the Highlands and Islands is now on the brink of becoming a reality and virtually every part of our area is in a position to reap the huge benefits offered by broadband technology."

Mr Roe added: "In aspiring to become one of the best regions in the world to live, work, study and visit we set a high but, we believe, achievable target.

"It is an aspiration shared by other areas throughout the world, with whom we have to compete vigorously for investment and people.

"Building on progress in recent years, the indications from the year just past strongly suggest we are moving in the right direction."

Nuclear plant

Over the year, funding was given to help the University of the Highlands and Islands Institute - which includes Inverness College - in its bid to earn university status.

Money was also awarded to the building of the Centre for Health Science in Inverness and the Eden Court Theatre revamp.

HIE gave assistance to 28 communities to buy land and buildings and was involved in work decommissioning the Dounreay nuclear plant in Caithness.