The Economy of Modern Malta: From the Nineteenth to the Twenty-First Century

391 Pages·2017·4.186 MB·English

by  Paul Caruana Galizia (auth.)

PALGRAVE STUDIES IN ECONOMIC HISTORY
THE ECONOMY OF
MODERN MALTA
From the Nineteenth to
the Twenty-First Century
Paul Caruana Galizia
Palgrave Studies in Economic History
Series Editor
Kent Deng
London School of Economics
London, United Kingdom
Palgrave Studies in Economic History is designed to illuminate and enrich
our understanding of economies and economic phenomena of the past.
The series covers a vast range of topics including financial history, labour
history, development economics, commercialisation, urbanisation, indus-
trialisation, modernisation, globalisation, and changes in world economic
orders.
More information about this series at
http://www.springer.com/series/14632
Paul Caruana Galizia
The Economy of
Modern Malta
From the Nineteenth to the Twenty-First Century
Paul Caruana Galizia
Institute of Economic History
Humboldt-University of Berlin
Berlin, Germany
Palgrave Studies in Economic History
ISBN 978-1-137-56597-6 ISBN 978-1-137-56598-3 (eBook)
DOI 10.1057/978-1-137-56598-3
Library of Congress Control Number: 2016960961
© The Editor(s) (if applicable) and The Author(s) 2017
This work is subject to copyright. All rights are solely and exclusively licensed by the
Publisher, whether the whole or part of the material is concerned, specifically the rights of
translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on
microfilms or in any other physical way, and transmission or information storage and retrieval,
electronic adaptation, computer software, or by similar or dissimilar methodology now
known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publication does not imply, even in the absence of a specific statement, that such names are
exempt from the relevant protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information
in this book are believed to be true and accurate at the date of publication. Neither the pub-
lisher nor the authors or the editors give a warranty, express or implied, with respect to the
material contained herein or for any errors or omissions that may have been made.
Cover illustration: © Armand Sciberras, Vetta/Getty Images
Printed on acid-free paper
This Palgrave Macmillan imprint is published by Springer Nature
The registered company is Nature America Inc.
The registered company address is: 1 New York Plaza, New York, NY 10004, U.S.A.
A
cknowledgements
I wrote this book as a fellow in the Institute of Economic History at
the Humboldt University of Berlin. My first debt is to Nikolaus Wolf,
the Institute’s Chair, for his support throughout two wunderbare Jahre in
Berlin. At Humboldt, I received excellent research assistance from Felix
Kersting, Oliver Salzmann, and André Wiesner.
Over the past few years, staff at the National Archives of Malta, the
National Statistics Office of Malta, the International Monetary Fund pub-
lications team, the London School of Economics Archives, the Cambridge
University Library Commonwealth Room, and the National Archives at Kew
helped me locate the material that formed the basis of this book. My editors
at Palgrave Macmillan, Sarah Lawrence and Allison Neuburger, were efficient
and helpful over the course of this project. Comments from Kent Deng, who
edits Palgrave’s Studies in Economic History series, and from Brian Blouet
and Alexander Apostolides helped me to improve the manuscript.
It was my family—Daphne, Peter, Matthew, and Andrew—who encour-
aged me to write an economic history of Malta, and who then listened to
me patiently about it for a year. That I was able to finish this book rather
than spend my afternoons cycling around Berlin and drinking weissbier is
a credit to Jessica, whose resolve and whose dedication to Malta represent
how, against all odds, the Maltese turned a ‘barren rock’ into a country so
weird and wonderful that it has no parallel. This is her book. Any errors
in it are mine.
Paul Caruana Galizia, Bidnija, July 2016
v
vi ACKNOWLEDGEMENTS
Map of Malta
c
ontents
1 Introduction: Development in the Long Run 1
2 Agriculture, 1800–1964 39
3 Industry and Trade, 1800–1938 127
4 The State and the Economy, 1939–1986 225
5 The Liberal Age, 1987–2008 305
6 Final Remarks 367
Index 379
vii
l f
ist of igures
Fig. 1.1 A century of pay: real wages for workers in trades and
agriculture, 1836–1938 16
Fig. 1.2 Maltese real wages relative to London and Milanese real
wages, 1836–1913 17
Fig. 2.1 Map of agricultural areas in Malta, 1957–1961 40
Fig. 2.2 Agricultural output quantity index, 1828–1938 46
Fig. 2.3 Yields of wheat, vegetables/fruit, and barley, 1839–1938 48
Fig. 2.4 Livestock yields, 1839–1938 51
Fig. 2.5 Government expenditure on agriculture, 1920–1938 59
Fig. 2.6 Salm of imported wheat released for consumption per capita,
1824–1899 61
Fig. 2.7 Wheat prices in Malta and England, 1781–1885 66
Fig. 2.8 Wheat duty as a proportion of wheat price per salm,
1800–1885 68
Fig. 2.9 The Rothbarth–Habakkuk thesis 75
Fig. 2.10 Wheat yields in Malta as proportion of Food and Agriculture
Organization of the United Nations (FAO) ‘ideal’ wheat yield,
1828–1938 82
Fig. 2.11 Distribution of labour between Malta and ‘North’ 89
Fig. 2.12 Inflation and the price of bread, 1843–1938 93
Fig. 3.1 Government education expenditure/total government
expenditure, 1827–1938 131
Fig. 3.2 Government expenditure on public works/total government
expenditure, 1831–1931 135
Fig. 3.3 Cotton lint output quantity index, 1828–1938 141
Fig. 3.4 Protection from imports, customs and import duties/imports,
1825–1938 147
ix
x LIST OF FIGURES
Fig. 3.5 Employment shares in commerce and manufacturing and
the ‘terms of trade’, 1851–1910 152
Fig. 3.6 Real wages for tradesmen and real military expenditure in
1938 £, 1836–1938 155
Fig. 3.7 The harbour and dockyard area 157
Fig. 3.8 Reexports as proportion of total exports, 1875–1907 165
Fig. 3.9 Ship tonnage and number of vessels cleared at Malta,
1826–1938 178
Fig. 3.10 Total net tonnage and transit through the Suez Canal,
1870–1913 184
Fig. 3.11 Externalities and sectoral change 193
Fig. 4.1 Government-imposed price ceiling 227
Fig. 4.2 Export-promotion effects 235
Fig. 4.3 Export growth, 1948–1970 238
Fig. 4.4 Real GDP growth (%), 1959–1971 246
Fig. 4.5 Net inflow of official development assistance and aid,
1960–1986 252
Fig. 4.6 Foreign Direct Investment Inflows, 1970–1987 257
Fig. 4.7 Domestic credit to the private sector, 1970–1986 259
Fig. 4.8 Import tariff effects 261
Fig. 4.9 Import quota effects 262
Fig. 4.10 Proportion of imports in domestic absorption 264
Fig. 4.11 Inflation rate (%), 1954–1986 265
Fig. 4.12 Demand for cash and income tax, 1960–1989 268
Fig. 4.13 Government total expenditure on education, 1971–1986 276
Fig. 4.14 Household inequality, 1963–1986 278
Fig. 5.1 Real GDP growth (%) in Malta and the other 2004
EU Accession countries 306
Fig. 5.2 The industrial protection game 311
Fig. 5.3 Production possibility frontiers 317
Fig. 5.4 International trade 318
Fig. 5.5 Real GDP per capita, 1987–2008 320
Fig. 5.6 The labour share of national income, 1974–2008 322
Fig. 5.7 Household income inequality index, 1987–2007 323
Fig. 5.8 Government expenditure on education, 1971–2008 324
Fig. 5.9 Trade ratio, 1986–2008 326
Fig. 5.10 Ratio of services exports to merchandise exports, 1986–2008 328
Fig. 5.11 From tourism to finance exports, 1990–2008 330
Fig. 5.12 Foreign direct investment, 1900–2008 331
Fig. 5.13 Employment in the public sector and government services,
1987–2008 335
Fig. 5.14 Structural change, 1971–2008 338
Fig. 6.1 Fiscal Surplus/GDP ratio and corruption perceptions index
in the euro zone, 1998–2014 368