Building a multi-sector recovery will be crucial

Building a balanced recovery is one of the key challenges for those who care about what we leave behind for future generations.

I was reminded of this on a recent holiday in the Canary Islands. There, and in particular on the island of Lanzarote, tourism is the industry upon which the entire economy pivots. Any shock to that sector would have a disproportionate impact on the economy’s performance. With employment and tax generation completely reliant on that single part of the economy, an event like the 2010 volcanic ash episode could have a catastrophic effect.

Of course, the Canaries have leveraged tourism with tremendous efficiency as it is the economic activity where they have comparative advantage. The geography severely limits its ability to foster other types of output such as food production and a small indigenous population makes education-based economics difficult.