The economic record of the post-2013 Labour administration is very impressive. An economy that had been mired in the bottom-half of the EU league table, ended becoming a dynamo that closed the large gaps in GDP per capita and in employment rates in a matter of a few years. An economy dependent on tourism and trade, instead of crushing in the face of a pandemic that decimated travel, ended up adding more workers. Germany with its extensive social welfare system saw the proportion of its population in severe material deprivation rise from 2.6% in 2019 to 7.2% in 2020, while in Malta the proportion fell from 3.6% to 3.3%.

The secret of this success lies in the string of reforms that Labour cabinets have put through. But equally important is the forward-looking progressive agenda that has characterised the Labour Party in recent years. In this light, the publication of “Malta’s Economic Vision: A Future-Proof Malta” is a welcome confirmation that this agenda is set to continue and to widen further.

The sub-title of this document, “A nation of courage, compassion and achievement”, sets the stage for a completely different take to economic policy. This is not the typical economic vision document published by Maltese political parties, with the usual wishlist of “new” economic sectors that are supposed to be pulled out of thin air. Instead it is a clear exposition of 5 guiding principles that will frame economic policymaking in the coming years.

The sub-title of this document, “A nation of courage, compassion and achievement”, sets the stage for a completely different take to economic policy.

Maltese politicians tend to have a “Soviet” or “Gaullist” industrial policy frame of mind, whereby they fantasize that they have an aptitude to pick winning sectors. Most economists will point out that a successful modern industrial policy is anything but this. In fact, it is based on 5 concepts:

• Industrial policy is a state of mind intended to foster a climate of cooperation between government and the private sector; it should follow markets instead of trying to lead them; focus on creating positive spill-overs rather than just hand out financial incentives.
• It has to focus to push firms from continuing to invest just where they were successful and in old technologies.
• Industrial policy needs to favour competition and create new comparative advantages.
• Governments should intervene only where society has a long-term interest.
• Industrial policy cannot be isolated, but has to be systemic, driven by “beyond-GDP” goals, and focus on building capabilities.

The Economic Vision presented by the Maltese Government is a prime example of this new philosophy. In fact, the 5 main pillars of this vision are 1) Sustainable economic growth geared towards quality-of-life improvements and increased resilience; 2) High quality infrastructure and investment; 3) Education and employment; 4) Environment; 5) High standards of accountability, governance and rule of law.

The Malta Economic Vision 2031 aims to re-dimension the country’s economic model towards inclusive and sustainable growth for the long-term by redefining the measures of success; sustaining and supporting investment as a key driver; safeguarding and enhancing competitiveness; improving productivity by leveraging Digital; strengthening economic sectors and developing new clusters and niches; and investing in research and innovation.

The Malta Economic Vision 2031 aims to re-dimension the country’s economic model towards inclusive and sustainable growth for the long-term by redefining the measures of success

The document sets out a vision to catalyse quality investment in infrastructure built around a national overarching plan; plan a transition to safe and secure multi-modal mobility; secure a reliable, clean and efficient energy mix; enhance digital connectivity and security; strengthen logistics connectivity; and enshrine the protection of existing green and open spaces and provide new such spaces while maintaining a healthy environment.

To further elevate the labour force to a level that competes with the most advanced economies, the Vision notes that Malta must frame the future skills landscape and prioritise closing of skills gaps; align education curricula with the skills required for tomorrow’s economy; establish Malta as an international education hub of excellence; reskill and upskill the workforce with the skills required for tomorrow’s economy; drive increased participation through structural changes; attract and retain diverse talent whilst curbing possible brain drain; and support the internationalisation of Maltese talent to increase access to knowhow, networks  and resources.

“Future-proof Malta” argues that economic growth and the safeguarding of the environment must be seen as integrated, rather than opposing forces. Today, environment standards are amongst those which exert a pull-factor on FDI. Activities which safeguard the environment will not only ensure a better quality of life and the safeguarding of natural resources, but also lead to the development of new economic niches, investment and a better tourism offering. The Vision points towards the need to ensure an efficient use of resources and better waste management; combatting emissions and pollution; achieving carbon neutrality; enriching biodiversity; providing Green Finance; protecting Malta’s seas and harnessing the blue economy; and the preservation and restoration of nature habitats.

Finally, the document underlines that good governance is at the heart of any well-functioning economy, creating long-term trust and enhancing comparative advantage. Investment in institutions such as the judiciary is as important as investment in infrastructure and education. The Vision underlines that economic success is dependent on enshrining the rule of law, strengthening governance and transparency; ensuring accountability; strengthening the regulatory environment to ensure and enforce compliance with the highest international standards; implementing the necessary reforms for a faster and fairer justice system; and prioritising data protection and privacy as fundamental prerequisites for a digital economy.

This new Economic Vision is a refreshing break from past economic plans, setting the scene for the next quantum leap of our society to become a dynamic and economically strong, socially inclusive, and environmentally conscious nation.