A location for innovation or for retirement?

The gist of my previous article was that if the EU is to deserve world economic leadership it needs to be innovative, change the rules of the game and not simply to try and outpace the US. To my mind the drafting of the EU Constitution provided a unique opportunity for some soul-searching; to think outside of the box. The drafting process could have served to stimulate debate among the EU' s policymakers, its intelligentsia, its people. Instead, we ended up with a legalistic document which ended up being botched. Perhaps, we really are at the end of history.

In the circumstances, the Lisbon Agenda remains the primary beacon piloting the EU towards the future. The strategic thrust of the Lisbon Agenda is encapsulated in two words: knowledge and innovation.

Knowledge is many times associated with high-tech activity. This is a very narrow interpretation. Knowledge is that permeating element that differentiates and adds value to what an enterprise society produces and markets. Parmalat is a multinational enterprise selling dairy products. It has survived some difficult times, proving it has solid foundations. Its resilience is simply due to its ability to bring knowledge into its products. The way that the company formulates and processes its products, its supply chain, the design of its packaging and so on.

On a different level, if I am feeling sick and visit my doctor, I will probably end up paying some Lm3. If I go to a specialist I will end up paying three times as much. Why? The latter embodies a higher level of knowledge emanating from her specialisation.

Malta and our enterprises are weak on both accounts. We are trying to be too many things for too many people. Operations tend to be fragmented and there is a low level of specialisation. Many of our enterprises are driven by a cost, and not a marketing, culture.

Innovation is often associated too closely with research and development, scientific and technological advancement as well as the ability to launch new products. Technologists, scientists and economists are largely to blame for this limited perspective. Ultimately, innovation is about doing things differently. It is about standing out from the competition, offering a product or service that creates value to some core group of clients. Innovation is a mind-set whereby the government, our enterprises, each one of us consistently seek to change and improve upon what we are doing. Innovation should not be change for the sake of change itself but is an essential requirement in today's dynamic, competitive global economy.

The EU's Enterprise and Industry Directorate, in its Annual Innovation Policy Review for Malta, does not mince its words. It states that Malta has no innovation policy; that whatever innovation activities take place are of an informal nature and that we desperately lack specific structured policies that are adapted to the realities of the local economy. The report adds that Malta has been "... very late in working on an innovation policy and is doing so at a time when the fiscal position inhibits any significant drive".

Public awareness in our country about the importance of innovation remains low. Our society places low value on technical and technological vocations. Our children are not being adequately trained to be quantitatively minded. Only 3.3 per 1,000 inhabitants within the 20-29 age bracket are graduates in science and engineering. The average in the EU is 10.2 per 1,000.

In its 2005 budget, the government promised to review the national framework for research and innovation, whether the university, Malta Enterprise or the Malta Council for Science and Technology was to be made responsible for innovation policy and what incentives were required to stimulate innovation in the private sector.

Our government is now obliged to submit to the EU a national reform programme. The most pressing challenges for the economy have to be identified and the government is to determine what actions need to be taken to bring Malta closer to the objectives set in the Lisbon Agenda. The preparation of such a plan requires inter-ministerial coordination and inter-organisational collaboration is critical for effective implementation. The complexity of present-day public policy-making demands that all the parties involved learn how to work together.

Recently a local newspaper reported that the Minister of Investment and Information Technology told Parliament's Social Affairs Committee that "A knowledge economy can exist without research and development, but not vice-versa". He also spoke about the future of manufacturing industry in Malta. Such important statements need to be further expounded and clarified by the minister, especially because he is also responsible for Malta Enterprise and the manufacturing industry in our country.

Perhaps the minister felt it important to make such comments after having read the conclusion of the above-mentioned EU report on Innovation. "Malta may well end up as a retirement home for Europeans, with little prospect for productive capacity in the manufacturing and other science sectors."

Malta is drifting backwards, carried away by forces such as globalisation, which are perceived as being totally beyond our control. We have already wasted too much time. We need to start moving forward again, not by accident but by design. This will require much more than the drafting of yet another programme or offering some fiscal incentives on budget day. We have been drunk on our success for too long. What will it be: Innovation or retirement?

fms18@maltanet.net