5 - 11 April 2001

Local investment key to economic growth

by Michael Carabott

Economies in the southern Mediterranean must exploit existing funds to invest locally creating a roll-over effect of attracting further foreign funds, according to a report published by Banca d’Italia.
The 550-page report mentions Malta as one of the countries which must learn from the mistakes made by State bank headquarters and invest locally to attract foreign interest.
The report, presented in Palermo on Tuesday, was a result of the preliminary phase of an extensive study commissioned by the Italian national bank in the summer of 1998. It was compiled by the Italian International Relations Office in conjunction with the Study
Services Department.
The report stated that banks and financial institutions in the southern Mediterranean hold the key to any progress in stimulating the region’s economy.
In order to expand and be efficient, financial institutions must attract foreign investment and that can only be done if they give other countries a reason to do so, stated the report.
The study said the growth of such financial institutions depends on their capacity to exploit their respective local markets to obtain funds in order to set up investments. This would in turn attract further funding from foreign markets and international organisations.
According to the report, local financial institutions in the European countries of Malta, Cyprus, Israel, Turkey as well as the Arab States of Morocco, Algeria, Tunisia, Egypt, Lebanon, Jordan Libya and Syria must recognise the
mistakes made by their respective Central Banks in order to move forward and overcome the problems facing their respective economies.