Malta’s economic transformation during the last decade was shaped by EU membership and the adoption of the euro. These two episodes mark the end of the post-war period and the start of a new journey. Having reached these milestones we need a new economic vision. In which direction does Malta want to head and what are its aspirations?
A vision creates a picture. Malta is currently visualised as a hub for services, such as financial services, remote gaming and back office operations.
But how will Malta look in 30 years’ time? Are we picturing a London-style financial district, a Paris-style tourist attraction, a Brussels-style centre for high level meetings for the Euro-med countries, or a Mediterranean-style relaxed lifestyle?
Another important element of a vision is that it represents a change from the status quo. As countries become increasingly aggressive in their bid to attract investment – and further harmonisation across the EU cannot be ruled out – it may become increasingly difficult for Malta to attract business purely on the basis of a favourable tax regime and other cost savings. There needs to be a genuine focus on how to equip the country with a competitive edge over other countries.
This will require concerted research across all sectors to identify the fundamentals which can make Malta stand out from its peers. Comparative advantage is something which can be built, but this requires a long build-up process.
A vision is also about values. Going forward, which values does the country want to ascribe to? In economic terms, where does Malta want to position itself along the solidarity versus individualism spectrum? Free health care, free education and state pensions are prime examples of economic solidarity, but will the increasing pressure on public finances change people’s views on the desirability or otherwise of these policies? What type of income distribution will be considered as acceptable in our country?
Malta’s economic vision should supercede its traditional vulnerabilities
A vision provides a map. The milestones which characterised Malta’s post-war economic vision are clearly identifiable. We now need to identify future milestones along with a high level description of how they can be reached. These will help us evaluate whether the country is on track to achieve its vision. Just as the EU has set itself public targets, our policy makers need to make a public commitment to their long term targets. Accountability demands this.
A vision challenges people. Malta’s economic vision should not replicate current realities but should be bold enough to aim at higher standards. Like a small entrepreneur who dreams of building an economic empire, Malta’s economic vision should supersede its traditional vulnerabilities and build on its resilience. Malta will always remain a small state in a geographical sense, but this does not mean that in economic terms Malta cannot grow up.
Who should spearhead Malta’s economic vision? Crafting Malta’s vision should not be left exclusively in the hands of politicians. Constituted bodies and NGOs must become more active in expressing their views. They should present a fuller analysis of their suggestions and move away from a pure lobbying function. The MCESD can also be upgraded to serve as a genuine forum where economic ideas are discussed and challenged.
History will reward those leaders who develop and contribute to Malta’s new economic vision.