There was a time when the world economy was propelled by power-driven machines and natural resources. The industrial age lasted for about two-and-a-half centuries and its hallmark was ‘mass’ everything: production, markets, distribution. Now, a different type of economy is emerging which is commonly referred to as the ‘knowledge economy’.
In what way is this economy different and what are its implications for the future well-being of our society?
Ten years ago, Malta made the decision to join one of the world’s largest economic groups to partly compensate for the perceived limitations of a micro-economy. This by itself cannot give us peace of mind as it is no guarantee of economic success.
‘Automatic’ convergence has been proven to be a myth with the European Union remaining characterised by significant regional dissimilarities. How far we advance, or fall back, economically depends solely on our ability to strategically manage our economy.
The deep systemic changes that are taking place globally make it important that we agree on the kind of society we want. Many of us attach great value to our present way of life even though we do not enjoy a high GDP per capita within the EU. This may be some sort of fool’s paradise but how much of it are we prepared to compromise in the search for higher incomes?
Lacking resources and a significant home market, industrialisation did not come ‘natural’ to Malta. We got the best out of it by teaming up with foreign direct investors who provided the necessary technology, know-how and access to international markets. We made good use of our proverbial flexibility to develop a competence in ‘managing complexity’, specialising in short-runs and fast delivery.
More recently, we successfully exploited local legal expertise, efficient public policymaking and taxation autonomy to develop our tertiary sector including financial services and internet gaming. Our economy has grown much more than it developed and its sustainability remains a concern.
Where do we go from here?
In determining the way forward we cannot just rely on solutions arising out of yesterday’s realities. Our collective mindset has to evolve from its industrial mode. This task is rendered more challenging giving the intrinsic realities of our ‘micro’ economy, which make it unproductive to just borrow blueprints arising from the realities of larger, more technologically-dependent societies.
There is no one single interpretation of what is the ‘knowledge economy’. Generally, it refers to activities that rely on intellectual capabilities, property, know-how, expertise in achieving competitive advantage on the marketplace.
Advanced economies increasingly realise that their high-cost structures do not permit them to compete on being cheaper, so they are trying to compete by being different. Know-ledge is the path which creates this differentiation. The former EU economic strategy (the Lisbon Agenda) aimed at making it “the most competitive and dynamic knowledge-driven economy by 2010”.
While the direction is clear, what is required to get there is not. Knowledge is often equated to technological advancement. This does not need to be the case with a micro economy. This consideration has fundamental implications for economic and innovation strategies.
Without dismissing the importance of technology, we have to equally nurture an environment which stimulates ‘softer’ competencies such as creativity. Our ideas and attitudes, and not products, machines or processes, should be at the centre of our strategies.
This is not about pitting art against science or technology. They complement each other and re-enforce the value creation process. Steve Jobs attributed the success of Apple to its ability to engage “poets, musicians and artists who are interested in technology”. Video games are an example of the ‘creative economy’, combing talent with software development.
We need to redefine our concept of resources to include creativity, flexibility and beauty
The creative economy perceives human ideas as the ultimate resource that will underlie competitive advantage in the 21 century. Creativity, seen as generating ‘something from nothing’ or ‘giving a new character to something’, is more amenable to Malta’s deep-rooted economic traits than R&D-driven technological development.
Knowledge in the creative sector arises out of an environment which encourages human interaction and depends a lot on peer learning. Creative knowledge develops out of relationships bringing together different backgrounds and disciplines, combining the rational with the irrational, individuality with the collective.
A creative economy demands an environment that encourages experimentation and gives multiple chances to those that fail. It entails changed skills, flatter business organisations and new patterns of work.
Creativity as a national competence needs to go beyond the ‘creative’, ‘cultural’ or ‘orange’ industries. We need to develop creativity as a social trait permeating our workforce and institutions.
How well are we preparing our children and employees for the future? Do our society and institutions promote and exploit idea-generation and talent? Does our education system give the necessary space to the creative and expressive arts, aesthetics and design to stimulate the emergence of homo creator?
The industrial era was a detour for our economy. We now have to unlearn much of what we learnt in the last 50 years. Our roots are in trading, brokerage and entrepreneurship. We need to redefine our concept of resources to include creativity, flexibility and beauty. This calls for a longer-term commitment and a changed approach to education and human resource development.
fms18@onvol.net