IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/62489.html
   My bibliography  Save this paper

The Challenges of Productivity Growth in the Small Island States of Europe: A Critical Look of Malta and Cyprus

Author

Listed:
  • Camilleri, Silvio John
  • Falzon, Joseph

Abstract

This paper looks at productivity growth rates in Malta and Cyprus and proposes policies as to how these island states countries might augment their productivity and competitiveness. We identify three possible growth strategies for the islands: an Innovation-Oriented Economy, a Controlled Input-Cost Economy and an Opportunistic Growth Model. In order to infer which strategy might be best suited to the two states, we conduct a comparative analysis amongst different EU countries in terms of productivity yardsticks. We also evaluate trends in Gross Value Added (GVA), employment levels, and Unit Labour Costs (ULCs) in the most important economic sectors of Malta and Cyprus. The research suggests that a Controlled-Input Cost model may be best suited to most Maltese and Cypriot economic sectors. We then propose a series of possible policies aimed at fostering future growth and competitiveness in the two island states.

Suggested Citation

  • Camilleri, Silvio John & Falzon, Joseph, 2013. "The Challenges of Productivity Growth in the Small Island States of Europe: A Critical Look of Malta and Cyprus," MPRA Paper 62489, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:62489
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/62489/1/MPRA_paper_62489.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Martin Bijsterbosch & Marcin Kolasa, 2010. "FDI and productivity convergence in Central and Eastern Europe: an industry-level investigation," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(4), pages 689-712, January.
    2. Tiago V. de V. Cavalcanti & Álvaro A. Novo, 2005. "Institutions and economic development: How strong is the relation?," Empirical Economics, Springer, vol. 30(2), pages 263-276, September.
    3. Easterly, William & Kraay, Aart, 2000. "Small States, Small Problems? Income, Growth, and Volatility in Small States," World Development, Elsevier, vol. 28(11), pages 2013-2027, November.
    4. Chad Syverson, 2011. "What Determines Productivity?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 326-365, June.
    5. Banji Oyelaran-Oyeyinka & Kaushalesh Lal, 2006. "SMEs and New Technologies," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-62545-7.
    6. Sourafel Girma & Anja Shortland, 2008. "The political economy of financial development," Oxford Economic Papers, Oxford University Press, vol. 60(4), pages 567-596, October.
    7. La Porta, Rafael & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1997. "Legal Determinants of External Finance," Journal of Finance, American Finance Association, vol. 52(3), pages 1131-1150, July.
    8. Silvio John Camilleri, 2005. "An Analysis of the Profitability, Risk and Growth Indicators of Banks Operating In Malta," Finance 0507021, University Library of Munich, Germany.
    9. Matthew Dornan & Frank Jotzo, 2012. "Renewable Technologies and Risk Mitigation in Small Island Developing States (SIDS): Fiji’s Electricity Sector," Development Policy Centre Discussion Papers 1213, Development Policy Centre, Crawford School of Public Policy, The Australian National University.
    10. John Stanley Metcalfe & Ronnie Ramlogan, 2007. "Competition and the Regulation of Economic Development," Chapters, in: Paul Cook & Raul Fabella & Cassey Lee (ed.), Competitive Advantage and Competition Policy in Developing Countries, chapter 2, Edward Elgar Publishing.
    11. Gordon Cordina, 2004. "Economic Vulnerability And Economic Growth: Some Results From A Neo-Classical Growth Modelling Approach," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 29(2), pages 21-39, December.
    12. Godfrey Baldacchino, 2006. "Small Islands versus Big Cities: Lessons in the Political Economy of Regional Development from the World’s Small Islands," The Journal of Technology Transfer, Springer, vol. 31(1), pages 91-100, January.
    13. Koi Nyen Wong & Soo Khoon Goh, 2013. "Outward FDI, merchandise and services trade: evidence from Singapore," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 14(2), pages 276-291, April.
    14. Boopen Seetanah & Shalini T. Ramessur & Sawkut Rojid, 2009. "Financial development and economic growth," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 36(2), pages 124-134, May.
    15. Harvey W. Armstrong & Robert Read, 2002. "The phantom of liberty?: economic growth and the vulnerability of small states," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(4), pages 435-458.
    16. Dias, Joilson & McDermott, John, 2006. "Institutions, education, and development: The role of entrepreneurs," Journal of Development Economics, Elsevier, vol. 80(2), pages 299-328, August.
    17. Cole, Rodney V., 1993. "Economic development in the South Pacific promoting the private sector," World Development, Elsevier, vol. 21(2), pages 233-245, February.
    18. Mr. Marcello M. Estevão, 2004. "Why is Productivity Growth in the Euro Area so Sluggish?," IMF Working Papers 2004/200, International Monetary Fund.
    19. George Petrakos & Georgios Fotopoulos & Dimitris Kallioras, 2012. "Peripherality and Integration: Industrial Growth and Decline in the Greek Regions," Environment and Planning C, , vol. 30(2), pages 347-361, April.
    20. Dani Rodrik, 1998. "Why Do More Open Economies Have Bigger Governments?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 997-1032, October.
    21. Kolasa, Marcin, 2005. "What drives productivity growth in the new EU member states? The case of Poland," Working Paper Series 486, European Central Bank.
    22. Olivier Blanchard, 2004. "The Economic Future of Europe," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 3-26, Fall.
    23. Easterly, William & Fischer, Stanley, 1995. "The Soviet Economic Decline," The World Bank Economic Review, World Bank, vol. 9(3), pages 341-371, September.
    24. Camilleri, Silvio John, 2006. "Strategic Priorities for Stock Exchanges in New EU Member States," MPRA Paper 62494, University Library of Munich, Germany.
    25. Mark Funk, 2003. "The Effects of Trade on Research and Development," Open Economies Review, Springer, vol. 14(1), pages 29-42, January.
    26. Marco Pagano & Paolo Volpin, 2005. "Shareholder Protection, Stock Market Development, and Politics," CSEF Working Papers 149, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    27. Biman Chand Prasad, 2008. "Institutions, good governance and economic growth in the Pacific Island countries," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 35(12), pages 904-918, October.
    28. Congdon Fors, Heather, 2007. "Island Status, Country Size and Institutional Quality in Former Colonies," Working Papers in Economics 257, University of Gothenburg, Department of Economics.
    29. Lino Briguglio & Gordon Cordina & Nadia Farrugia & Stephanie Vella, 2009. "Economic Vulnerability and Resilience: Concepts and Measurements," Oxford Development Studies, Taylor & Francis Journals, vol. 37(3), pages 229-247.
    30. Manera, Carles & Taberner, Jaume Garau, 2006. "The Recent Evolution and Impact of Tourism in the Mediterranean: The Case of Island Regions, 1990-2002," Natural Resources Management Working Papers 12134, Fondazione Eni Enrico Mattei (FEEM).
    31. Tomaz Dentinho & Pedro Ferreira & Vasco Silva, 2006. "Input Output Tables for the Management of Water Resources in Islands. The Case of Terceira Island," ERSA conference papers ersa06p124, European Regional Science Association.
    32. Vania Sena, 2004. "The Return of the Prince of Denmark: A Survey on Recent Developments in the Economics of Innovation," Economic Journal, Royal Economic Society, vol. 114(496), pages 312-332, June.
    33. Djeto Assane & Abbas Grammy, 2003. "Institutional framework and economic development: international evidence," Applied Economics, Taylor & Francis Journals, vol. 35(17), pages 1811-1817.
    34. Lal, Kaushalesh & Peedoly, Aveeraj Sharma, 2006. "Small Islands, New Technologies and Globalization: A Case of ICT adoption by SMEs in Mauritius," MERIT Working Papers 2006-005, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    35. Briguglio, Lino, 1995. "Small island developing states and their economic vulnerabilities," World Development, Elsevier, vol. 23(9), pages 1615-1632, September.
    36. Andrew Copus & Dimitris Skuras & Kyriaki Tsegenidi, 2008. "Innovation and Peripherality: An Empirical Comparative Study of SMEs in Six European Union Member Countries," Economic Geography, Taylor & Francis Journals, vol. 84(1), pages 51-82, January.
    37. Menon, Sudha Venu, 2007. "Singapore economy:An overview," MPRA Paper 4667, University Library of Munich, Germany, revised 15 Aug 2007.
    38. Mr. Rodney Ramcharan, 2006. "Does Economic Diversification Lead to Financial Development? Evidence From topography," IMF Working Papers 2006/035, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nicholas Sammut & Diana Spiteri & Joseph Paul Sammut & Irene Coppola & Roberta Lepre & Benjamin Lebrun, 2020. "The Status of Sustainable Social Innovation in Malta," Sustainability, MDPI, vol. 12(10), pages 1-10, May.
    2. Camilleri, Silvio John & Scicluna, Nicolanne & Bai, Ye, 2019. "Do stock markets lead or lag macroeconomic variables? Evidence from select European countries," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 170-186.
    3. Petar Kurecic & Filip Kokotovic, 2017. "Examining the "Natural Resource Curse" and the Impact of Various Forms of Capital in Small Tourism and Natural Resource-Dependent Economies," Economies, MDPI, vol. 5(1), pages 1-24, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Anna Maria Pinna & Vania Licio, 2013. "Measuring insularity as a state of nature. Is there a case of bad geography," ERSA conference papers ersa13p706, European Regional Science Association.
    2. Montalbano, Pierluigi, 2011. "Trade Openness and Developing Countries' Vulnerability: Concepts, Misconceptions, and Directions for Research," World Development, Elsevier, vol. 39(9), pages 1489-1502, September.
    3. Brito, João Antonio, 2015. "Defining Country Size: A Descriptive Analysis of Small and Large States," MPRA Paper 66149, University Library of Munich, Germany.
    4. Harvey W. Armstrong & Robert Read, 2020. "Size And Sectoral Specialisation: The Asymmetric Cross‐Country Impacts Of The 2008 Crisis And Its Aftermath," Journal of International Development, John Wiley & Sons, Ltd., vol. 32(6), pages 891-921, August.
    5. Lino P. Briguglio & Melchior Vella, 2015. "Labour demand in the EU and returns to scale: A production function approach," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 24(8), pages 1103-1116, December.
    6. Henrik Hansen & Derek Headey, 2010. "The Short-Run Macroeconomic Impact of Foreign Aid to Small States: An Agnostic Time Series Analysis," Journal of Development Studies, Taylor & Francis Journals, vol. 46(5), pages 877-896.
    7. Patrick Guillaumont, 2010. "Assessing the Economic Vulnerability of Small Island Developing States and the Least Developed Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 46(5), pages 828-854.
    8. Lino Briguglio & Gordon Cordina & Nadia Farrugia & Stephanie Vella, 2009. "Economic Vulnerability and Resilience: Concepts and Measurements," Oxford Development Studies, Taylor & Francis Journals, vol. 37(3), pages 229-247.
    9. Khalid, Usman & Shafiullah, Muhammad, 2021. "Financial development and governance: A panel data analysis incorporating cross-sectional dependence," Economic Systems, Elsevier, vol. 45(2).
    10. Sèna Kimm Gnangnon, 2019. "Effect of Export Upgrading on Financial Development," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 10(03), pages 1-37, October.
    11. Jean-François Hoarau & Nicolas Lucic, 2022. "Are real merchandise imports per capita a good predictor for the standard of living for the small island world: Testing for the imports-led growth and the growth-led imports hypotheses in panels over ," TEPP Working Paper 2022-16, TEPP.
    12. Sèna Kimm Gnangnon, 2012. "Structural Vulnerability and Excessive Public Indebtedness in CFA Franc Zone Countries," Working Papers halshs-00749470, HAL.
    13. Patrick Guillaumont, 2009. "An Economic Vulnerability Index: Its Design and Use for International Development Policy," Oxford Development Studies, Taylor & Francis Journals, vol. 37(3), pages 193-228.
    14. Valérie ANGEON & Samuel BATES, 2015. "L'Agriculture, Facteur De Vulnérabilité Des Petites Économies Insulaires ?," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 42, pages 105-131.
    15. Angeon, Valérie & Bates, Samuel, 2015. "Reviewing Composite Vulnerability and Resilience Indexes: A Sustainable Approach and Application," World Development, Elsevier, vol. 72(C), pages 140-162.
    16. Congdon Fors, Heather, 2007. "Island Status, Country Size and Institutional Quality in Former Colonies," Working Papers in Economics 257, University of Gothenburg, Department of Economics.
    17. Han, Yutao & Pieretti, Patrice & Zanaj, Skerdilajda & Zou, Benteng, 2014. "Asymmetric competition among nation states: A differential game approach," Journal of Public Economics, Elsevier, vol. 119(C), pages 71-79.
    18. Patrick GUILLAUMONT, 2007. "EVI and its Use. Design of an Economic Vulnerability Index and its Use for International Development Policy," Working Papers 200714, CERDI.
    19. Blancard, Stéphane & Hoarau, Jean-François, 2013. "A new sustainable human development indicator for small island developing states: A reappraisal from data envelopment analysis," Economic Modelling, Elsevier, vol. 30(C), pages 623-635.
    20. Canh, Nguyen Phuc & Thanh, Su Dinh, 2020. "Domestic tourism spending and economic vulnerability," Annals of Tourism Research, Elsevier, vol. 85(C).

    More about this item

    Keywords

    Cyprus; economic growth; growth policies; Malta; productivity; unit labour costs;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:62489. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.