Economic development on The Canary Islands with “Distributed Teams”

Last month (November2019), I spoke at Nomad City about “distributed teams” as a new approach to economic development.

This was the fourth Nomad City conference hosted in Las Palmas de Gran Canaria, Canary Islands. There were sessions on building careers while traveling, personal brand building, the challenges/advantages of building a remote business and other topics important to freelancers, “remote” workers and companies willing to tap into remote work. This year also featured a panel session, as well as a longer more in-depth think tank session, on economic development. I was invited to speak at both.

Why a conference about remote work – in the Canary Islands? For background, the Canary Islands are Spanish islands in the Atlantic, physically off the coast of Morocco. In Europe, these islands are most known for tourism – a “recent” focus of the local government. They started encouraging tourism in the 1970s, which required them to spend a lot of time and effort shifting the public perception of beaches from “sunny beaches with families of children making sandcastles” to “adults playing in the surf, sun and all night parties”. It has been wildly successful for decades and has encouraged other nearby sun/beach locations to do the same. At this point, approx ~14 million tourists visit the Canary Islands each year. For comparison, the total population of the Canary Islands is 2 million. At this point, direct tourism and tourism related revenue accounts for 35% of the GDP of the Canary Islands (or 55% of GDP depending on how you count tourism-related construction) and accounts for over 40% of the total employment. The rest of the economy depends on agriculture (~20%) and a diversity of industries. I was personally surprised to find that because of the natural deep ocean water so close to land creating sheltered ports, there is a long history of repair/maintenance of deep ocean going ships – from Columbus and Magellan through to modern fleets of oil exploration ships.

The local economy has been quietly and consistently growing pretty well for a while now, but there are concerns. Having an economy dependent on a single revenue stream is always a concern. After all, a diversified portfolio is more stable than having all eggs in one basket. In this case, their economy’s reliance on tourism has some additional concerns:

  1. Tourism is seasonal, so it is hard to predict accurately. This means that most of the economy literally depends on predicting the weather on the islands, as well as where tourists usually come from. This can cause surprise fluctuations to flights, hotel bookings and local major events at short notice.
  2. Climate change brings concerns about rising waters to these islands, like all other coastal locations around the globe. It also brings risk to their tourism industry. Many tourists come to the Canaries to escape the cold/dark of winter in northern Europe. As those winters become less severe because of climate change, would people decide to stay home or vacation somewhere nearby instead? This is further complicated by the recent closure of a major budget airline and tour operator in Europe, making travel to these islands more expensive. An additional factor is a rising “flight shaming” movement to counter the impact of airplane flights on the environment. The combination of all these raises the question: What happens if these tourists start choosing to stay home or vacation somewhere closer to home instead?
  3. Approximately 50% of citizens under the age of 25 are unemployed. Another 30% are underemployed, meaning they are overqualified for the work they hired for (while here, I heard in-person anecdotes of people with PhDs working as bartenders pouring drinks for tourists!).

To address these issues, local government officials and industry leaders have been looking for ways to diversify the income economy of these islands for a while now. Some impressive steps so far include:

  1. High speed internet: Residential internet connections of 600 Mbs are guaranteed and affordable. For specific business districts, internet connections of 1GBs are considered normal. These numbers were confirmed by my (non-scientific) sampling of internet speeds in various locations while I was there.
  2. Tax incentives: These islands are part of Spain and within the European Union (EU). This means that any company based here can operate across the entire EU. These islands are part of a special EU tax incentive zone to encourage companies to be created and grown here. I am not a tax accountant, and there are small-print-conditions to consider, but companies in the Canaries meeting those criteria have corporate tax rates significantly lower than others in the EU. Also, humans living here pay a lower consumer sales tax of 6.5% compared to an average 21% in the rest of the EU. 
  3. Bike rentals: There are well organized, affordable, bike shares widely available across Las Palmas and a growing network of dedicated bike-only lanes. This makes getting around easier then figuring out car ownership and parking – and cheaper than taxis.
  4. Conservation policies: Because of the geographic terrain, there are protected deep ocean scuba diving areas just off the downtown beaches, walking distances from offices. And preventing light/radio pollution in the high mountain tops has allowed the creation of two space observatories as well as a deep space communication center for the European Space Agency. These unique assets only exist today because of previous forethought creating policies to protect these unique locations.

Encouraging non-tourism companies to relocate to these rugged, beautiful islands would help diversify the local economy. The local civic leaders are well aware of the importance of this, so no surprise that it is something they’ve been trying for a while now, with mixed success.

However, if there was a way for humans on the islands to have meaningful work with employers that are not on these islands, that would be a game-changer. My “incentives for humans not corporations” mantra was eagerly agreed with – and some were even already working towards this. There are several co-working spaces on the islands – each with their own slightly different focus. Some cater to tourists or surfers looking for an impromptu place for some professional video calls/meetings before returning to fun in the sunshine. Some cater to digital nomads who will be daily users for a few weeks/months, until they leave to explore somewhere else. (Many of these also include “coliving” – with small apartments or shared accommodations.) Some cater to locals or expats who are now residents of the Canary Islands, usually running their own companies – and need a reliable office-as-a-service to work from outside of their home. Ignacio “Nacho” Rodriguez created a coworking space in 2014 which has been a big success. His mantra of “We work from places we love” is obviously popular.

All this explains why Ignacio wanted me to talk about this new approach to economic development at the Nomad City conference and also at some workshops before/after. Attendees were a mix of digital nomads, company founders, academics and civic/government leaders. This mix of different perspectives made for some very interesting discussions, on and off stage. These discussions have continued gathering momentum even after the official conference ended. It’ll be exciting to see what we end up creating and if more people can start working from places they love!

John.

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