Enabling strategy to promote more research

Small countries face formidable challenges in their quest to develop a knowledge-based economy in comparison with larger countries. Limited resources and the increasing complexity of technologies prevent them from developing an R&D infrastructure of sufficient strength. At the same time, due to smaller scale production, such states have difficulties in competing in low-tech and mid-tech segments of the world market, which is increasingly dominated by Asian tigers with their cost advantages and relative technological strength.

Given its minuscule size, Malta faces such challenges.

Ninety per cent of global private research takes places in just seven countries including 40 per cent in the United States. As a result of globalisation in the last few decades, the internationalisation of production and R&D has been driven by multinational companies that try to gain access to new markets and technologies wherever these exist. Small countries like Malta find it quite difficult to attract technologically oriented foreign investment because it requires the existence of a high-level research and technological infrastructure, like top-quality higher education in the sciences and also science parks.

If Malta is to catch up with other smaller countries in the EU in the race to attract such investment in research, it has to develop this human and physical infrastructure. The setting up of the BioMalta campus in San Ġwann could therefore be a significant breakthrough that will promote Malta as a centre of excellence for research in the sectors of biotechnology and life science. The fact that this campus will be located on the site of two disused textile factories is really symbolic because it represents the replacement of old economic activities with new-economy ones.

The Minister of Finance announced that it was the government’s intention to lure back Maltese researchers working abroad. While the development of a knowledge-based economy is never the result of a single political decision, such initiatives are hopefully part of a continued longer term process that builds both on adequate public policy and a series of strategic choices made by various private sector operators.

The objective of a knowledge-based economy can never be achieved by simply increasing the public sector investment for R&D but must include private investors who see opportunities arising from the opening up of markets combined with the specific support that a country offers in research infrastructure.

As a small country, Malta cannot expect to be in the absolute forefront of emerging radically new industries like ICT and biotechnology. It is far more important for us to ensure that we are able to host certain parts of the global R&D effort and that those who decide to invest here will find a broad cluster of domestic supporting activities of the highest possible knowledge and technology intensity. The experience of countries like Ireland and Singapore indicates that in a small state with an open economy the strongest and virtually the only possibility to increase the knowledge-intensity of the economy is to implement a targeted foreign investment strategy.

Malta produces some of the best graduates in sciences even if, regrettably, it seriously lags behind many other small countries when considering the percentage of students who go for the tougher University courses in sciences. As remarked in the recently published European Commission report on Malta’s competitiveness, “Malta should improve the overall qualifications of its workforce if further progress is to be achieved”.

Ultimately, the country’s best economic strategies are as good as its ability to turn them into reality.