The demand for imports in the Maltese economy

Abstract

Imports may be simply defined as the flow of goods and services which enter into one country and which are the products of an other country. Malta has practically no natural resources and must therefore obtain its requirements from abroad in exchange. for exports. About 45 percent of total final expenditure in Malta is spent on imports compared with, for example, the United Kingdom and the United States where the proportion is about 17 percent and 9 percent respectively. A high proportion of Malta's imports is accounted for by food, oils and raw materials for industrial production. Research on Malta's imports has been included in the studies on the Maltese economy by Waldorf (1969), Metwally (1977) and Brigulgio (1987 and 1988). In this study we shall try to analyse the determinants of Malta's aggregate demand for imports of goods during the period 1964 to 1985. Separate results are also obtained for the quantity of imports of consumer goods and imports of industrial supplies. According to the theory of demand, one expects a relationship between the quantity demanded of imports, the price of imports (relative to the price of domestic goods) and the level of real income.