Locating industry in Malta: theory and practice

Abstract

The objective of this study was to identify the factors which had a decisive influence on foreign investors in making a locational choice for their export-oriented operations in Malta. The research was also designed to elicit information about what potential investors may consider relevant in making an investment decision today. A field study was chosen as the research methodology. A model of locational decision in foreign investment was constructed to provide conceptual foundations for the empirical study. Attention was focused on the country-related factors which were considered the most important set of variables affecting locational decisions. It was found that most firms were motivated to go abroad by the desire to reduce production costs in order to become more competitive. The substantial wage differential in Malta proved to be the main locational-pull factor. Various constraints faced by foreign investors were identified and a number of recommendations were proposed. The study concludes that government has a catalytic and positive role to play, to attract the kind of inward investment which is most suitable for Malta’s long-term development.