Malta’s economic history has had its ups and downs since the attainment of independence in l964. At that crucial point, Malta deliberately relinquished its traditional role as an Island fortress, and was obliged to look forward to earning its own keep by developing a market economy. It was an act of faith.

Malta has survived so far, overcoming many a pitfall. It managed to embark on the road to industrialisation, setting up a number of small labour-intensive manufacturing units. It developed its tourist sector and tiptoed into the services sector, attaining discreet results. Along the way, it managed to secure significant financial assistance, first in the form of rent for the temporary use of its defence installations, and, later, through a financial protocol with Italy. These sources have now dried up.

There were various attempts to articulate economic policy – ranging from seven-year plans to market liberalisation techniques. The economy performed unevenly, but, in the main, growth kept its momentum, with a steady improvement of the average quality of life.

Soul searching

The rapid advance of globalisation took its toll on Malta’s manufacturing sector. Poor economic management on the part of the government triggered overspending, excessive borrowing, and steep taxation – all of which eroded spending power and debilitated market activity.

The ensuing disenchantment is now a source for soul searching. Thousands of electors – consumers and taxpayers – who are feeling the pinch, having been appreciably set back, wonder what the future holds, unless there is a change of direction. Businessmen, whose expectations are by no means all that bright, demand action. Could their prayers be answered, if the economy is administered by the people, and on the lines, that led to the present predicament?

The need of a change of course is paramount. It is equally urgent.

There is an urgent need to sanitise the political climate, and to liberate it from the political partisanship that pollutes it. Politicians and their respective parties must find a way to work together, in the national interest, in sensitive areas. And they must see to it that the relevant institutions are managed by men of merit, rather than party hacks. Associating public office with meritocracy is an indispensable political decision, which must be buttressed by a constitutional formula binding all political parties.

The challenge

This sort of approach could provide firm foundations. But the devil is in the nitty-gritty of economic management. Malta lacks an agreed strategy focusing on priorities and on opportunities within our reach. Given that – and good management with entrepreneurial drive – we can make up for lost time, and face up to the challenge that confronts us.

This is not the ideal domain for politicians, least of all for those whose lack of economic good sense is equalled by their lack of political savvy.

Malta has had good advice, in the past, as to how to proceed on the path of economic development.

As long ago as the early 1970s, M. M. Metwally, an Egyptian economist and econometrician who had taught in five universities before coming to Malta, suggested that it would not be in the best interest of the Maltese economy to lay too much emphasis on manufacturing, and, in particular, to develop this sector at the expense of others. As the same time, he maintained that, although industrialisation has its limitations, “any successful move towards expanding the manufacturing sector should be both encouraged and praised”.

Industrialisation strategy

His point was that Maltese industrialisation strategy ought to concentrate particularly on (i) achieving competitive strength in the type of products where small-scale manufacturing operations can be efficient and (ii) developing specialised or complementary small plants as a joint venture with large foreign producers who would need the output as components of the products they produce.

He suggested a pattern of development through home-based export services, either directly – eg tourism, attracting permanent settlers, and establishing Malta as an international conference centre of repute – or even establishing an international university, offering courses of high standards in fields which do not require too much materials. (Since then, we have successfully set up English-language schools that attract thousands of students each year).

Other suggestions anticipated initiatives to set up an international financial centre and a duty-free port.

At that time, Professor Metwally drew the fire of critics ought to have known better – and who probably did. Today, these critics are older and wiser.

Another columnist, writing in another section of the press, (The Times, 27 December), Joe Vella Bonnici harped on the need to continue consolidating such hardy manufacturing enterprises that have managed to soldier on, and whose performance is critical to the stability and growth of our economy.

He followed the Metwally formula by updating it.

“We need to change our approach, our mind-set,” he said.

Indeed, we have to understand the “dynamics of competitiveness which are becoming increasingly complex and intertwined on our social, political and environmental frameworks”.

In order to survive, we must establish a reputation, an identity and a track record, which takes time.

But time is of the essence. The least the politicians can do, is to help make up for the precious time lost.

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