Pedagogy for competitiveness

Published on the Malta Independant¸ issue Sunday¸ 28 November 2010

An extract from the latest IMF report on Malta talks of the challenges that lie ahead but also the considerable opportunities. While the closer integration of the world economy magnified the impact of the current crisis¸ countries that reform their structures stand a better chance of speeding the recovery¸ as demand from the countries that first return to growth will take exports¸ and thus production¸ from their trading partners. In its annual report the IMF issued a clear warning to those who harp on about how well the island did in the wake of the global recession¸ and quaintly declared that the economy is “enjoying a cyclical upswing¸ but the momentum is expected to fade”.

The report continues to reassure us that¸ as a small and very open economy¸ Malta is adjusting well to the challenges posed by globalisation. Progress is being made in diversifying the economy through higher value-added activities¸ including aircraft maintenance¸ pharmaceuticals¸ financial and accounting services¸ ICT and more.

It tells us never to give up our drive to upgrade and promote synergies between the various economic clusters. Any hesitancy in this task would augment the risks stemming from potentially unfavourable changes in the frail international recovery. At this juncture¸ it is pertinent to recall that the Governor of the Central Bank of Malta cautioned us to monitor wage increases¸ making sure that these reflect productivity developments. Competitiveness is also suffering from low participation of a vast pool of tertiary level women and one hopes that a partial remedy will be more family friendly measures for part-time work and flexible working practices.

So while politicians tell us to be jubilant about our successes we cannot rest on our laurels. Malta definitely needs to sharpen its tools to become more competitive as its latest ranking was 55th place in the world index. Economists tell us that a robust competitiveness policy must encourage dynamism and transition into an open marketplace in the global context.

Thus if our national policy is not formulated in this way¸ it could hinder and undermine the motivation that is needed for exporting firms to succeed in both the EU and the world market place. Nonetheless¸ the EU is offering its members generous help to put their economy back on track and one of the programmes is the European Regional Development Fund (ERDF).

This funding scheme is aimed at strengthening economic and social cohesion in the European Union by correcting imbalances between its regions and focusing its intervention on diversifying economic structures¸ creating sustainable jobs¸ fostering innovation and competition and increasing economic and social cross-border activities. In this manner the EU is helping Malta to speed up the process of penetrating new markets and providing ad hoc networking opportunities to improve levels of competitiveness and innovation. This may seem too utopian to be true and yet very few are making use of this facility to help them penetrate overseas niches¸ which to some extent is not so easy now due to distressed markets.

Still¸ the EDRF programme does attempt to build a deeper understanding of the fundamentals of global leadership and competitiveness using various tools and case studies and aid packages.

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