26 JUNE 2002
Comic this week: Freezonomics
Malta and the new economy a perfect match
The new economy, the theme of our forthcoming Economic Update magazine, is a sector perfectly suited to Maltas particular economic potential.
It is in this area that the economies of scale, which have been held to blame time and time again for the failure of Maltese enterprises to reach new heights, no longer apply.
The new economy has opened up a constantly expanding market exceeding 500 million potential consumers. Despite the fact that these consumers are spread about the four corners of the world, todays technology places each of them mere seconds away.
The new economy represents a changing world in which people work with their brains instead of their hands and a world in which communications technology is creating new avenues for markets to pursue.
In the new economical order infiltrating our daily lives, innovation is more important than mass production and investment means purchasing new concepts or the means to create them, rather than new machines. The only constant in this new order is rapid, constant change.
The applications of the new economy undoubtedly apply to the local scenario. By international comparison, Malta's economy is one of the most reliant on foreign trade and as such is very much integrated with the world economy.
It is widely recognised that Malta as a country cannot let itself become detached from these developments.
Like most economies Malta, has a vast amount of Small to Medium Sized Enterprises, which account for a large percentage of the economy.
In fact, the private market services industry has developed rapidly over the past 10 years or so, with employment surpassing that of private direct production. Information and communication technology has also made fast progress within the Maltese consumer masses and companies.
It has been argued that the characteristics of the old economy had never suited Maltas island economy. Even from an environmental and geographical point of view, Malta would be hard pressed to dedicate large tracts of land to accommodate large production plants for steel, cars, chemicals, energy and the like. Such a strategy would also fail to complement Malta's other economical priority - the tourism industry.
The characteristics associated with the new economy are immeasurably better suited to Malta and the rewards in terms of productivity and economic growth are likewise more lucrative.
The potential for Malta in the new economy is significant and determined action is being taken to create a niche for the country in this sector. Maltas strategic location, multilingual and skilled human resources, the countrys company law and legal framework - including incentives in the Business Promotion Act allow for a conducive environment for such investments and many operators having been taking advantage of the local scenario.
With the digital industry still in a stage of relative infancy, it allows for an entry point with very good returns and, as the new economy is knowledge-based, it is well suited for sustainable development in Malta.
The opportunity is knocking but competition is harsh. Malta must act fast to ensure a place among the worlds developing knowledge-based economics.