The sector of research and innovation in Malta still leaves much to be desired and in general, companies do not offer incentives for employees to come up with innovative ideas, said Adrian Said, economist and chief coordinator of Competitive Malta and Partner Institute of the World Economic Forum.
Mr Said was giving a presentation as he launched The Global Competitiveness Report 2007-2008 during a business breakfast organised by The Malta Business Weekly at the Hotel Phoenicia yesterday.
Published by the World Economic Forum, the Global Competitiveness Report’s overall competitiveness ranking is the Global Competitiveness Index (GCI), developed by Colombia University Professor Xavier Sala-i-Martin and originally introduced in 2004.
The United States tops the overall ranking in the report, while Switzerland is in second position, followed by Denmark, Sweden, Germany, Finland and Singapore.
This year’s GCI has been refined, based on testing and expert feedback. It is based on 12 pillars of competitiveness.
These are: institutions, infrastructure, macroeconomic stability, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market sophistication, technological readiness, market size, business sophistication and innovation.
This is the fifth year that Malta is participating in the report. In 2007, Malta ranked 56th out of 131 countries, representing a drop in ranking from the 51st position achieved last year.
Despite the decline, Malta ranks positively in a number of areas, including institutions (31st), health and primary education (38th), financial market sophistication (20th), technological readiness (32nd) and quality of national business environment (38th).
On the other hand, other issues contributing to Malta’s competitive disadvantage vis-à-vis the other countries surveyed include infrastructure (47th), macroeconomic stability (66th), labour market efficiency (103rd), business sophistication (60th), innovation (62nd) and sophistication of company operations and strategy (60th).
Mr Said, who interpreted Malta’s results in comparison with those of other countries, said national competitiveness was derived from the set of institutions, policies and factors that determine the level of productivity of a country.
The level of productivity, in turn, sets the sustainable level of prosperity that can be earned by an economy, said Mr Said, adding that more competitive economies tend to be able to produce higher levels of income (GDP per capita) for their citizens.
He said the GCI is intended to parade country success of the lack of it, but more importantly, it is a benchmarking tool that can be used to compare strengths and weaknesses of individual countries vis-à-vis others.
The GCI provides a platform for business leaders and policymakers to identify obstacles to improved competitiveness, while at the same time stimulating discussion on strategies to overcome obstacles to improved competitiveness.
Mr Said identified Malta as an efficiency-driven economy, striving to be a more innovation-driven economy.
“The R&I sector in Malta leaves much to be desired and it is clear that businesses find it difficult to be innovative because they do not find adequate infrastructure to support innovation.
“As a result, in general, companies do not offer incentives for employees to come up with innovative ideas.”
“If you had to take the US and Switzerland, you will find that their businesses are very sophisticated and innovative,” said Mr Said, adding that Malta did not really have brands that could compete on an international level.
According to the Global Competitiveness Survey 2006-2007, inefficient government bureaucracy emerged as the most problematic factor for doing business by far, while tax rates and inadequate supply of infrastructure were the second and third most problematic factors, respectively.
Competitiveness and Infrastructure Minister Censu Galea, who was among those present during yesterday’s business breakfast, spoke extensively about R&I in Malta.
“Although we never really used to speak about R&I until about five years ago, the government wants to invest further. We want to move forward at the fastest pace possible, but we must also analyse how far we have come and identify our targets,” said Mr Galea.