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19 maltatoday | SUNDAY • 22 MARCH 2026 OPINION Economist Bigger is not always better JP Fabri I am big fan of Marianna Maz- zacuto's work on public innova- tion and state capability. A recent paper published by her and Rain- er Kattel made a very interesting read and also offered a lens to analyse Malta's public sector es- pecially in light of Vision 2050 and other strategies and regen- eration plans that were recently launched. Malta's public sector has grown. Employment has expanded. Spending has increased. Govern- ment today plays a larger role in the economy than it did a decade ago. Yet public frustration per- sists. This is the uncomfortable truth we must confront: Malta has built an expansive state, but not neces- sarily an effective one. The chal- lenge is not size. It is capability. Vision 2050 outlines bold am- bitions for the country. It speaks of sustainability, wellbeing, com- petitiveness and resilience. But visions do not deliver themselves. The central constraint to achiev- ing long-term transformation is whether the public sector pos- sesses the capabilities required to steer complex change. International research helps illuminate this gap. Mariana Mazzucato and Rainer Kattel argue that modern states must move beyond the narrow log- ic of correcting market failures. Governments today are called to shape markets, guide innovation, and steer socio-technical tran- sitions. Doing so requires more than budgets and headcount. It requires what they describe as structural capacities, organisa- tional routines, and dynamic ca- pabilities that allow governments to experiment, learn and adapt under uncertainty. The distinction between capac- ity and capability is crucial. Ca- pacity refers to scale—how many people, how much funding, how many programmes. Capability re- fers to what those resources can actually accomplish together. Many governments increase capacity without upgrading ca- pability. The result is expansion without effectiveness. Malta's experience reflects this tension. Regeneration efforts in Marsa, repeated over successive administrations, illustrate a state that can design plans but struggles to sustain coordinated, cross-sec- tor delivery over time. Similarly, proposals such as cultural leave reveal how policy conceived with- in one domain can generate unin- tended consequences in another when systemic effects are insuffi- ciently understood. Research on public sector re- form shows that traditional pro- gramme management assumes predictability. It places large bets upfront, designs detailed plans, and measures success through outputs and compliance. In com- plex environments, this approach often fails. Assumptions go un- tested until late. Feedback loops are weak. Learning is slow. Risk accumulates quietly until it be- comes politically and financially expensive. The alternative is mission orien- tation. A mission is a clearly defined societal outcome that cuts across silos and aligns policy, funding, regulation and delivery around a shared objective. It forces clarity. It exposes trade-offs. It demands coordination. Most importantly, it reshapes how government or- ganises itself. Instead of fragmented depart- ments guarding mandates, mis- sions require cross-ministerial coalitions for change. Coalitions for change are not committees. They are empow- ered, multidisciplinary teams drawn from across government, working alongside private ac- tors, academia and civil society to solve defined problems. They combine policy design, opera- tional knowledge, data expertise, procurement skills and financial oversight within a single delivery architecture. Such coalitions enable gov- ernments to move from writing strategies to solving systems. Singapore offers a relevant les- son. Its state is not simply large. It is strategically capable. It works through cross-agency teams and long-term missions that align public investment with private sector capability. The govern- ment acts as funder, coordinator and strategic partner, crowding in private innovation rather than crowding it out. Industrial trans- formation was not left to mar- kets alone. Nor was it delivered through bureaucratic fragmenta- tion. It was steered through de- liberate coalitions that integrated finance, regulation, infrastructure and enterprise development. The result is not perfection. It is co- herence. Malta, by contrast, often re- lies on vertical accountability structures and inter-ministerial consultation processes that slow decision-making and dilute own- ership. Complex issues such as housing affordability, climate re- silience or labour market reform are treated as sectoral policies rather than systemic missions. This model struggles in a world defined by interconnected risks. Consider climate resilience. Re- search on systemic climate stress shows that risk today is com- pounding and cascading across supply chains and sectors. Insur- ance mechanisms alone cannot absorb these shocks. Effective adaptation requires coordinated public planning, credible data in- tegration, and long-term invest- ment signals. A fragmented state cannot manage systemic risk. A mission-oriented state can. The deeper problem is cultural. Over decades, public administra- tion has been shaped by a focus on static efficiency—minimising costs, meeting short-term targets, outsourcing complexity. Yet the challenges Malta faces demand dynamic efficiency, or rather, the ability to reconfigure institutions, learn continuously, and steer structural transformation over time. Static efficiency shrinks the state. Dynamic efficiency strengthens it. An expansive but low-capability state risks becoming distortion- ary. It may dominate employ- ment and spending, yet fail to catalyse innovation or resilience. It may crowd out private initiative without providing strategic direc- tion. It may generate compliance but not outcomes. Capability-building must there- fore become a national priority. First, missions must be clearly defined. Not generic ambitions, but measurable, time-bound so- cietal objectives that cut across ministries. Regenerating a spe- cific urban region, decarbonising a defined sector, or increasing workforce productivity within a decade. Missions clarify direction and align resources. Second, cross-ministerial coa- litions must be institutionalised. These teams should hold joint accountability for outcomes, with authority to align budgets and procurement around mission goals. Third, the public sector must strengthen its internal skills. Over-reliance on consultants weakens institutional memory. Capability in data, systems think- ing, contract management and delivery design must be embed- ded within government. Fourth, government should em- brace its role as strategic funder and market shaper. Public finance should crowd in private capabili- ty. Partnerships should be struc- tured around shared missions, not transactional outsourcing. Vision 2050 can succeed, but only if it is underpinned by a transformation in how the state works. Malta does not need a smaller state. Nor does it simply need a larger one. It needs a state that learns, adapts and sustains direc- tion beyond electoral cycles. Regeneration efforts in Marsa, repeated over successive administrations, illustrate a state that can design plans but struggles to sustain coordinated, cross-sector delivery over time