Aspects of the economic evolution of Malta since independence in 1964
At independence in 1964, Malta's economy remained entirely dependent upon the revenue and employment provided by the British and NATO fortress on the Islands. The implications of this dependence were serious as, in 1957, the British Ministry of Defence had announced its intention to run down, and eventually to terminate its military involvement in the Maltese Islands. Faced with the imminent loss of a substantial proportion of the economy's revenue and employment, successive Maltese Governments (of both the major political parties) adopted vigorous economic diversification strategies. It was generally accepted that domestically generated economic development was impossible, and that economic diversification could only be achieved through the deliberate attraction of overseas enterprise. Multinational Corporations (MNCs) were therefore invited to participate in, and develop the three crucial sectors of the Maltese economy - the dockyards, the new manufacturing sector, and tourism. Inevitably, the attraction of MNCs into the crucial sectors of the economy ensured that control of the economy was placed in the hands of overseas entrepreneurs, whose interests were not necessarily consistent with those of the Maltese Islands. The subsequent development of strongly dependent dual structures throughout key areas of the Maltese economy had by 1980 induced extreme economic instability. Given this background, the intention of this thesis has been to evaluate Malta's post-independence development record. One of the best means of achieving this aim was seen as to be the adoption and adaption of a number of themes contained within 'dependency theory'. This avenue of enquiry has proved to be rewarding in two ways. first, the various concepts of of dependence have helped to shed light upon the development experiences of Malta. Also important, however, is the fact that the Maltese case has itself raised many relevant questions concerning the application of dependency theory in empirical studies. The thesis itself can be divided into three distinct sections. Section One briefly discusses development, and then proceeds to examine the concept of dependence Of particular interest is the degree to which dependency theory is applicable to small countries, and the role of MNCs in the generation of dependence. Section Two provides the essential historical background to Malta's current position, and Section Three sets about examining in some detail the development of the Maltese economy, with particular reference to the growth of manufacturing industry and tourism. The conclusions of the thesis again fall into two distinct groups. With respect to dependency theory, it seems that dependency themes can be of substantial use in the evaluation of a country's development process. With respect to Malta, it is apparent that Malta in the 1980s is facing a crisis of dependence that is rather more severe than that which faced the Islands at independence in 1964. The problem has clearly been that of excess dependence upon MNC subsidiaries. On the one hand, MNCs are seen as essential due to the inability of the domestic economy to generate its own industry. On the other hand, the dependent structures that have ensued have proved to be unstable and unreliable. Clearly, a compromise situation is desirable in which Government intervention ensures that foreign industries are attracted to the Islands, but that they are attracted selectively, and that their less desirable activities are meticulously restricted by the Government.