German presence in Malta

Germany's economic revival after the devastation of World War II was primarily the work of West German Chancellor Konrad Adenauer who, despite seemingly insurmountable problems, succeeded, in a relatively short time, to transform his country into an economic power again.

When the 1951 Schuman Plan, involving a single high authority for the German and French coal and steel industries, was launched, Adenauer eagerly embraced it and, for the first time after the end of hostilities, Germany was treated as a partner on equal terms. Eventually this led to the creation of the European Economic Community in 1957. French and German ties were cemented with the coming to power of General Charles de Gaulle in France in 1958.

The inherently tenacious German character has paid dividends. The continued close relations between France and Germany from then on were instrumental in strengthening and widening the EEC to become the European Union we know today. Germany has become Europe's economic locomotive.

This newly generated wealth has had many spill-overs to other countries; Malta too has benefited from Germany's economic growth. The German presence in the island's economy is substantial, since some 52 German enterprises operate here.

This has contributed greatly to strengthening trade links between the two countries and has created thousands of jobs in Malta. Maltese personnel of German-owned firms are benefiting from a more disciplined approach to work and more efficient work practices, not to mention training.

Suffice it to say that German firms used to hire professional human resources people to pick potential industrial leaders and, before entrusting them with the management of a firm, they used to send those selected to Germany for courses in the German language, personality building, management procedures and work systems.

These figures show that trade between the two countries expanded dramatically from very small beginnings when Malta was still a colony. This was because only after Malta became independent in 1964, under Dr George Borg Olivier's Nationalist government, that the island embarked on industrialisation. During the Seventies and Eighties Malta succeeded in having a favourable trade balance with Germany since many German textile firms were attracted to invest here. The balance again turned in Germany's favour in the next two decades.

Between 2000 and 2005 (the latter figures being provisional), total trade between the two countries surpassed that of the previous decade. Comparing these figures to those of trade with other countries it is clear that German trade has made considerable inroads at the expense of Britain and Italy, the island's traditional trade partners for historical and geographical reasons.

It should not be assumed that the German presence in Malta is limited to trade. In tourism, as Table 2 shows, from insignificant beginnings in the Sixties, tourist arrivals from Germany have grown consistently. Germany was Malta's third largest tourist market in the Sixties and Seventies.

But in the Eighties and Nineties, German visitors overtook those from Italy, and actually accounted for more than double the inflow of Italian tourists. What is of greater significance is the rate of change between the different decades. The German market experienced the highest growth, surpassing that of the UK.

These figures are extremely illuminating. There was a policy in the past that Malta should not rely exclusively on the UK market but should diversify. In fact, though the number of UK tourists has consistently increased in absolute terms, its rate of increase has remained flat.

In this respect the German market has been a successful one, as the rate of increase was substantial in the Eighties and Nineties. There is no doubt that the German contribution to our tourist sector, which accounts for a quarter of our GDP, has been considerable.

Thus it makes sense to nurture this strong German presence in manufacturing and tourism in Malta and to encourage it in other areas.

Dr Borda is an economist specialising in the economic development of small states.