In Malta, the number of employees of the most knowledge-intensive firms has grown from 14,284 in 2014 to 15,370 in 2016.
- The concentration of occupations in highly knowledge-intensive firms is the highest in Southern Europe, even surpassing France.
- However, the rate of growth has been slower than the European average.
The new study, which is aimed at businesses and investors making a strategic choice about where to locate or invest, shows that 5.5% of the working age population of Malta is employed in highly knowledge-intensive companies. This is higher than the European average of 5%.
Dr Nima Sanandaji, President of the ECEPR, said that the overall trend is that Central- and Eastern European countries are catching up to Northern and Western Europe. “We already see that countries such as Estonia, Czech Republic, Hungary, Slovenia and Latvia have all surpassed France in brain business jobs concentration.”
“Malta is another notable nation. By pursuing an offensive growth-strategy, Malta is moving towards a knowledge economy. The country is on its way to becoming the new Singapore of the Mediterranean, and needs to invest in human knowledge accordingly”, said Dr. Sanandaji who himself moved to Malta from Sweden three years ago.
Weaknesses and strengths
In terms of industry, Malta has a number of strengths. The main strength is in film/TV/music followed by advertising and market research, telecom, head offices & management and programming. In these areas, Malta has a higher share of knowledge-intensive firm occupation than the European average. On the other hand, Malta lags behind the rest of Europe when it comes to areas such as high-tech manufacturing and R&D.
Understandably, countries of the size of Malta tend to have specialized business sectors. The challenge for Malta is to continue expanding knowledge-intensive business sectors, in order to strengthen its role as the leading Brain Business Jobs hub of Southern Europe – a region which is overall behind other parts of Europe.
Europe is increasingly a skilled-based economy, with growth happening where the brains are. A new generation of IT-specialists, engineers and other knowledge workers are emerging from the universities of Central and Eastern European countries. While some of these talents do move to places such as Amsterdam, Zurich and Bern, many settle in the capital regions of their home countries.
Cost of living a major obstacle
The key for the success of knowledge-intensive industries is to attract talent. Regions with a very high cost of living face a disadvantage. Here firms must pay high wages for programmers, engineers and the like. This is a challenge for already rich nations such as Norway, Switzerland and the UK. Malta, with a rapidly rising cost of living, must also tackle this issue.
Dr Sanandaji explains: “The study finds that knowledge regions with lower costs of living and correspondingly lower wages have a competitive advantage. Bringing down the cost of living is key for long term performance, since it affects the cost of business for hiring a skilled programmer or engineer. Increasingly, we will see that individuals rather than moving to Amsterdam and Zurich will stay in places such as Bratislava, Budapest or even Bucharest and sell their services on the international market. Much like China became the manufacturing hub of the world, the capital regions of the Central and Eastern European nations are becoming the new brain business centres”.
Download CountryProfiler Publications