Malta is a southern European hotbed for ‘brain businesses’ – companies that compete through their brain power and expertise, according to The Geography of Europe’s Brain Business Jobs, the latest report from the European Centre for Policy Reform and Entrepreneurship (ECEPR), supported by NC Advisory AB, advisor to the Nordic Capital funds.

The new study, which is aimed at businesses and investors making a strategic choice about where to locate or invest, shows that 5.5% of the working age population of Malta is employed in highly knowledge-intensive companies. This is higher than the European average of 5%.

ECEPR president Nima Sanandaji said the overall trend is that central and eastern European countries were catching up to northern and western Europe. “We already see that countries such as Estonia, Czech Republic, Hungary, Slovenia and Latvia have all surpassed France in brain business jobs concentration.”

“Malta is another notable nation. By pursuing an offensive growth-strategy, Malta is moving towards a knowledge economy. The country is on its way to becoming the new Singapore of the Mediterranean, and needs to invest in human knowledge accordingly”, Dr Sanandaji, who himself moved to Malta from Sweden three years ago, said.

Weaknesses and strengths

In terms of industry, Malta has a number of strengths. The main strength is in film/TV/music followed by advertising and market research, telecom, head offices & management and programming. In these areas, Malta has a higher share of knowledge-intensive firm occupation than the European average. On the other hand, Malta lags behind the rest of Europe when it comes to areas such as high-tech manufacturing and research and development.

The challenge for Malta was to continue expanding knowledge-intensive business sectors to strengthen its role as the leading brain business jobs hub of southern Europe – a region which was overall behind other parts of Europe.

Cost of living a major obstacle

The key for the success of knowledge-intensive industries was to attract talent. Regions with a very high cost of living faced a disadvantage. For they had to pay high wages to employees such as programmers and engineers. This was a challenge for already rich nations such as Norway, Switzerland and the UK. Malta, with a rapidly rising cost of living, also had to tackle this issue.

Dr Sanandaji said: “The study finds that knowledge regions with lower costs of living and correspondingly lower wages have a competitive advantage. Bringing down the cost of living is key for long term performance, since it affects the cost of business for hiring a skilled programmer or engineer.

"Increasingly, we will see that individuals rather than moving to Amsterdam and Zurich will stay in places such as Bratislava, Budapest or even Bucharest and sell their services on the international market. Much like China became the manufacturing hub of the world, the capital regions of the central and eastern European nations are becoming the new brain business centres”.

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