The Economic Structure 'Since the British withdrew in 1979, Malta has managed to attract a number of international companies to its shores, which contributed significantly to the country’s industrialisation process'

Since the British withdrew in 1979, Malta has managed to attract a number of international companies to its shores, which contributed significantly to the country’s industrialisation process. At the time, Malta’s main comparative advantages included, low wages, the availability of a well-educated and English-speaking labour force, and tax incentives. In the early nineties, Malta began the process of privatising state controlled companies and introducing legislation to liberalise markets and to promote communication, competition and transparency. Malta’s major resources are limestone, a favourable geographic location and a productive labour force. Malta has limited fresh water supplies and imports practically everything it needs for consumption and investment purposes. In fact, Malta is one of the most trade-dependent economies in the world, with its imports and exports hovering in the region of 160% of Gross Domestic Product. The country’s economy is largely based on trade, tourism, manufacturing (especially electronics and textiles) and financial services. The services sector is the largest contributor to Malta’s Gross Value Added (GVA), with a total share of 73% and an employment rate of 68%. Manufacturing follows, with a contribution of 25% of Malta’s GVA and an employment rate of 29%. Agriculture, on the other hand accounts for only 2.5% of Malta’s GVA and for 2% of the gainfully occupied population. With regards to the export sector, the Maltese economy depends heavily on tourism and on the exportation of electronic components. According to the Malta Tourism Authority, direct and indirect earnings from tourism, account for around 25% of Malta’s Gross National Product. The exports of electronic components by one single firm, on the other hand, represent approximately half of Malta’s merchandise trade. Other sectors in which Malta can offer an exceptional advantage in comparison to other destinations are: ICT, knowledge centre/back office services, health care (rated within the top 5 worldwide by WHO), logistics, maritime (natural harbours, well equipped ports, bunkering, transhipment etc.), aviation and training/education. Malta joined the European Union in May 2004 and in the following year, it joined the Exchange Rate Mechanism II (ERM II). In May 2007, Malta was given the green light by the European Commission to adopt the Euro in January 2008. Although Malta is now a member of the European Union, it is not a member of the Schengen Treaty yet. It is currently adopting Schengen regulations with the goal to be finished by 2007.