Problems of exporting from Malta

Abstract

There is probably no businessman in Malta who does not realise the importance of exports to the economic welfare of the country. There will be few who are not aware that our visible trade balance is very unsatisfactory. In fact Malta has always had a negative balance in visible trade, which balance has been offset or reversed by net grants, invisible receipts and remittances from abroad. In the past invisible earnings from Services' expenditure have, but for some odd years enabled us to show a favourable balance of payments. As earnings from Services' expenditure continue to more earnings from other sources. The task bristles Malta is a very small country with limited natural resources. The Island has depended for generations on the employment provided by military bases. As a consequence of these factors, Malta's economy was based on importing goods that have been paid for through providing services primarily to British military personnel and their families. This structure was reflected in the Balance of Payments of these Islands, which was characterised by a heavy import bill and the dominance of Services' expenditure. This reliance on British Defence expenditure meant that the economic performance of the country became a function of Britain's demand for Malta's services as a fortress. Our eggs were mainly in one basket: The consequent result was inevitable. The White Paper on Defence of April, 1957 sounded the death knell for the existing economy. In 1961 no less than 17.6 per cent (15,710) of the gainfully occupied population of these Islands (89,220) was directly employed with the Services. In this same year the rundown of the British forces, and consequently expenditure, began. Malta's artificial economy was shattered. The situation was made worse when Britain announced in 1966 further plans to accelerate the rundown of its base here - the second rundown. Services' employment is scheduled to fall drastically to 3,500 by April, 1972. Total local expenditure on British Defence Account will fall from £12.5m in 1966 to £6m in 1972. Malta had to look around for new ways of earning her living. It had to find means of creating employment, the human side of the rundown problem, and ways of earning foreign exchange to make up for the loss of income from Service expenditure here. In most of the developing countries the basic problem is not poverty of resources; but this is one of the basic problems in the case of Malta. A constricted geographical area and limited natural resources are the prime problems of this Island. Although the island is fertile, the size of the agricultural sector is obviously limited because of the size of the area. Malta imports about half its food and practically all the durable and capital goods. As a generalisation, in countries with small internal markets, the problem is to secure better use of natural resources and develop the existing opportunities for international trade. This involves building up the various institutions necessary to the working of the market economy - banks, savings organisations of all kinds, a capital market, agricultural cooperatives, training institutes and so on. And the growth of the private sector can also be encouraged by a range of incentives designed to lower the cost of establishing projects, and increase their profitability once they are established.