Develop each of the main ideas (1 - 7) given in exercise 4.1.

Render the article and say whether you agree to the ideas expressed in it. If there are any items you partially agree to or you cannot agree to whatsoever, give your reasons.

4. Read the paragraphs from the text entitled «Virtual bridges» given below in the wrong order (A - G).

Put the paragraphs in the logical order. Use the word combinations (1 - 7) to work out the logical structure of the text. They reflect the main ideas of the paragraphs and are given in the right order.

1. Malta's joining the euro area and its consequences for the population

2. Future economic prosperity of Malta and its leading branches if industry

3. Integrating into the EU and developing financial and IT services

4. Malta's attractiveness for foreign investors

5. Fast development of insurance services

6. A wide range of businesses streaming to Valletta

7. Successful development of IT business in Malta

A. The government is hoping the euro will transport Malta's economy to a bright future based on services. The dwindling of Britain's military presence over the 1970s withered the islands' old fortress economy. With great effort, the authorities lured some manufacturing, including textile factories, microchip plants, and presses that print banknotes. But textiles are drifting off to China and other parts of Asia, and chip foundries might follow, forcing Malta's manufacturers to move upmarket. Increasingly Maltese firms, such as makers of high-quality wooden furniture, are finding that their products are competitive around Europe. Bordeaux's newest posh hotel has doors made in Malta.

B. Most of the investment is going into financial services, and one niche in particular: the in-house or " captive" insurance operations of big car-makers. BMW has moved its captive insurance unit from Dublin; Renault, PSA Peugeot Citroen, Volkswagen, Vodafone and RWE have also set up shop in Valletta. These units, which are run by insurance-management firms such as Marsh & McLellan, are allowed to sell a range of other insurance products around the EU. There are also some 250 hedge funds based in Malta. The value of assets under their management has grown sevenfold to €7.5 billion ($10.6 billion) in the three years since the EU accession.

C. But the most spectacular recent arrivals are investors from the United Arab Emirates seeking a European bridgehead. Dubai Holding, an investment firm which has attracted technology giants such as Microsoft, Hewlett-Packard, Cisco and Oracle to a development called Internet City on the outskirts of Dubai, is spending more than $300m to set up a similar facility in Malta. " They wanted a one-stop shop for Europe, " says Mr Gonzi, " and they have undertaken to create 3, 500 proper IT jobs." He is hoping this will attract other big names to Malta. Again, the local vocational college has promised to churn out suitably qualified workers. If only the bigger economies in Europe could move so nimbly in the face of globalisation.

I). Malta is also discovering that in an increasingly virtual world, being an island is no longer an obstacle to providing services, especially in finance and computing. In the late 1980s the government tried building a typical offshore financial-centre, complete with (ax sheltering and secrecy. But that got in the way of another Maltese aim - to join the European Union. So the country changed tack and aimed for integration into Europe, with a financial sector that passed all European tests for onshore probity.

E. In the marinas of Malta there is much talk of gleaming new yachts snapped up by buyers with wads of cash and little interest in sailing. The Maltese lira will disappear in January, when the tiny Mediterranean archipelago joins the euro area. Many Maltese have savings stashed under mattresses and are scared of attracting the taxman's attention if they go to the bank to convert them to euros. Several tax amnesties have yielded little in the way of deposits. Instead, Maltese seem to be rushing to spend their hidden lire on big-ticket items while they still can.

F. Other industries are beginning to follow. Lufthansa, which already services its smaller planes at Malta's airport, plans to tend to its widebody fleet there as well. The Maltese have created a special course for aircraft technicians at a local college to ensure a steady supply of qualified workers. About 20 pharmaceutical firms making generic drugs have also joined the herd of businesses streaming to Valletta, because a wrinkle in Maltese law allows them to do development work on copycat versions of patented drugs and so to be ready to market them in the EU when the patent expires.

G. One big effect of joining the EU was a surge in inward investment. Last year the flow was around 550m Maltese lire (SI88m), more than 25 times the level ten years ago, according to Lawrence Gonzi, the prime minister. Foreigners are attracted chiefly by Malta's tax system, which allows income tax on dividends to be offset against corporate tax, reducing the effective tax rate on dividends from 35% to 5%. It also helps that accommodation and labour costs are between one-half and one-third those of rival hubs, such as Dublin and Luxembourg. (" The Economist" October 6' - 12^th 2007)

4.2. Complete the sentences given below:

a. The article under review is entitled....

b. The problem tackled upon in the article refers to the area of.... с The main idea conveyed by the author is that....

d. The author describes the main changes brought about by the decision of the government of Malta to join....

e. The author makes a detailed survey of....

f. The author gives a number of examples to illustrate the fact that....

g. These numerous examples prove that....

Develop each of the main ideas (1 - 7) given in exercise 4.1.

4.4. Compare the economic situation in Malta with the situation in other European countries on the eve of and shortly after joining the euro area. Use the following expressions:

S In comparison with / compared to (with) S (To be) similar to / analogous to

(To be) different from •S (much) higher / cheaper / more expensive // less profitable... than // 10 per cent

more... than

No worse... than // a third more... than, three times more... than ■ S As... as, not so... as ■ S Twice / three times as much •/ Whereas ■ S The most complicated / experienced / sophisticated...

4.5. Think over and discuss the following issues by answering the questions:

1. Why do you think a country like Malta decided to enter the EU and the euro area?

2. Which of the two is more difficult for such a country from the political / economic / cultural point of view?

3. What are the main advantages and disadvantages of joining the euro area for Malta?

4. What countries benefit more from entering the euro area: leading highly-developed European economies or small countries like Malta?

5. If you were Prime Minister of Malta, would you also advocate joining the euro area? Give your reasons.

5. Read i In article and think of an adequate title.

1. Among American financial commentators, it is almost universally accepted that shares always rise over the long run. And this perception does seem to be backed up by evidence; if you take any 20-year period, Wall Street has always delivered positive real returns. In addition, one ought to expect shares (which are risky) to deliver a higher return than risk-free assets such as government bonds.

2. Nevertheless, investors ought also to remember the world's second largest economy, Japan. Its most popular stock-market average, the Nikkei 225, peaked at 38, 915 on the last trading day of the 1980s; this week, nearly 18 years later, it was still only around 17, 000, less than half its peak. Buying on the dips did not work either. By 1994, the Nikkei had fallen to 21, 000 - at which point a technical analyst told this columnist that it had to be one of the greatest long-term buying opportunities.

3. Investors, who suffered through the Depression, when American stocks fell almost 90% from their peak, at least had a decent dividend yield to hold on to. But the Japanese market has offered a paltry yield throughout this period.

4. Japan might seem to be an exception and America is just as much of a special case. Think back to the start of the 20th century when investors might have picked Russia, China and Germany as the rising stars of the next 100 years. Within the next half-century, investors saw their holdings wiped out by revolution while world wars and hyperinflation ruined the portfolios of those who backed Kaiser Wilhelm IPs empire.

5. Elroy Dimson, Paul Marsh and Mike Staunton of the London Business School examined the record of 16 stock-markets which were in continuous operation over the course of the 20th century. In itself, this selection showed survivorship bias by excluding the likes of Russia and China. The academics found that only three other countries could match the American record of having no 20-year periods with negative real returns.

6. Other investors were far less lucky. Japanese, French. German and Spanish investors all suffered instances where they had to wait 50 - 60 years to earn a positive real return; in Italy and Belgium, the waiting period stretched to 70 years. It was no good following the famous advice to " put the shares in a drawer and forget about them"; the furniture would not have lasted that long.

7. Besides survivorship bias, there is another problem with the belief that stock-markets must always go up; the very existence of the belief is likely to lead to its falsification. Investors will keep buying until prices reach stratospheric levels. That clearly happened in Japan in the late 1980s and with the technology-heavy NASDAQ index in the late 1990s; the latter is still, after seven years, not much more than half its peak level. (Abridgedfrom " The Economist" October 6'¹' - 12" ' 2007)

5.1. State a) the problem tackled upon in the article and b) the main idea conveyed by the author.