Palgrave Studies in Economic History. Series Editor Kent Deng London School of Economics London, United Kingdom
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1 Palgrave Studies in Economic History Series Editor Kent Deng London School of Economics London, United Kingdom
2 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, industrialisation, modernisation, globalisation, and changes in world economic orders. More information about this series at
3 Paul Caruana Galizia The Economy of Modern Malta From the Nineteenth to the Twenty-First Century
4 Paul Caruana Galizia Institute of Economic History Humboldt-University of Berlin Berlin, Germany Palgrave Studies in Economic History ISBN ISBN (ebook) DOI / Library of Congress Control Number: 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 publisher 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.
5 Acknowledgements 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 publications 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 encouraged 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
6 vi ACKNOWLEDGEMENTS Map of Malta
7 Contents 1 Introduction: Development in the Long Run 1 2 Agriculture, Industry and Trade, The State and the Economy, The Liberal Age, Final Remarks 367 Index 379 vii
8 List of Figures Fig. 1.1 A century of pay: real wages for workers in trades and agriculture, Fig. 1.2 Maltese real wages relative to London and Milanese real wages, Fig. 2.1 Map of agricultural areas in Malta, Fig. 2.2 Agricultural output quantity index, Fig. 2.3 Yields of wheat, vegetables/fruit, and barley, Fig. 2.4 Livestock yields, Fig. 2.5 Government expenditure on agriculture, Fig. 2.6 Salm of imported wheat released for consumption per capita, Fig. 2.7 Wheat prices in Malta and England, Fig. 2.8 Wheat duty as a proportion of wheat price per salm, Fig. 2.9 The Rothbarth Habakkuk thesis 75 Fig Wheat yields in Malta as proportion of Food and Agriculture Organization of the United Nations (FAO) ideal wheat yield, Fig Distribution of labour between Malta and North 89 Fig Inflation and the price of bread, Fig. 3.1 Government education expenditure/total government expenditure, Fig. 3.2 Government expenditure on public works/total government expenditure, Fig. 3.3 Cotton lint output quantity index, Fig. 3.4 Protection from imports, customs and import duties/imports, ix
9 x List of Figures Fig. 3.5 Employment shares in commerce and manufacturing and the terms of trade, Fig. 3.6 Real wages for tradesmen and real military expenditure in 1938, Fig. 3.7 The harbour and dockyard area 157 Fig. 3.8 Reexports as proportion of total exports, Fig. 3.9 Ship tonnage and number of vessels cleared at Malta, Fig Total net tonnage and transit through the Suez Canal, Fig 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, Fig. 4.4 Real GDP growth (%), Fig. 4.5 Net inflow of official development assistance and aid, Fig. 4.6 Foreign Direct Investment Inflows, Fig. 4.7 Domestic credit to the private sector, Fig. 4.8 Import tariff effects 261 Fig. 4.9 Import quota effects 262 Fig Proportion of imports in domestic absorption 264 Fig Inflation rate (%), Fig Demand for cash and income tax, Fig Government total expenditure on education, Fig Household inequality, 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, Fig. 5.6 The labour share of national income, Fig. 5.7 Household income inequality index, Fig. 5.8 Government expenditure on education, Fig. 5.9 Trade ratio, Fig Ratio of services exports to merchandise exports, Fig From tourism to finance exports, Fig Foreign direct investment, Fig Employment in the public sector and government services, Fig Structural change, Fig. 6.1 Fiscal Surplus/GDP ratio and corruption perceptions index in the euro zone,
10 List of Tables Table 1.1 Summary of demographic statistics, Table 1.2 Aggregate growth in Malta and Britain, Table 1.3 Family consumption basket based on 1938 Royal Commission report 15 Table 1.4 Subsistence basket for Malta 19 Table 1.5 Welfare ratios in Malta and around the world, Table 2.1 Rainfall of Malta 44 Table 2.2 Potato exports, Table 2.3 Domestic versus imported wheat prices in 1938 per salm, Table 3.1 Employment in the cotton economy, Table 3.2 Dockyard employment, Table 3.3 Revenue from port activity, Table 3.4 Table 3.5 Statement of cargoes from Malta, 1 January 1808 to 31 July Sail/steam break-even distance and global net tonnage, Table 3.6 Domestic export diversification, Table 4.1 Sectoral employment shares (%), Table 4.2 Sectoral GDP shares (%), Table 4.3 Employment in manufacturing excluding the dockyard, Table 4.4 Sectoral employment, Table 4.5 Gross emigration and unemployment, Table 4.6 Real deposit rates (%), xi
11 xii List of Tables Table 4.7 Estimated currency demand in total and shadow economy, Table 4.8 National minimum wage and cost of living, Table 5.1 Sectoral employment, Table 6.1 Perceptions of corruption in different public services in Malta and the EU,
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