Malta and its surrounding islands have very little in the way of natural resources. Only the limestone, which is suitable for making cement. Additionally, the forests were sacrificed to shipbuilding sometime around the dawn of history, so that wood has had to be imported for centuries. However, Malta’s greatest advantage is its location as a nexus between the eastern and western Mediterranean and between North Africa and Sicily. This predestined it for a major role in naval matters in particular.

For several centuries, a profitable textile industry also developed on the basis of cotton, which the Arabs brought to Malta in the 9th century. The governments protected this trade through a wide range of laws and decrees – even the Grand Masters of the Order of the Knights of St John, which had relocated its headquarters from Rhodes in 1530 in the face of the advancing Ottoman threat. However, the Industrial Revolution, which began in England in 1767 with the invention of the Spinning Jenny, rapidly overwhelmed Maltese cotton production. The new spinning machines made possible low-cost, mass production, and the exploding trade in raw cotton from British India and the US quickly squeezed the Maltese producers out of the market.

Following the arrival of the Order of the Knights of St John,  maritime-related trades gained in importance, particularly ship maintenance and repair. The order, now also known as the “Sovereign Military Order of Malta”, had chosen the island on account of its strategic location in the Mediterranean and its extremely well-protected anchorages: large natural harbours exist on both sides of the peninsula on which the new capital of Valleta was built starting in 1566. Over the centuries, the order developed the “Grand Harbour” to the southeast, which is divided into smaller bays by multiple land spits, into a heavily defended base for its navy: shipyards were sited on the Kalkara Peninsula (in Maltese Il-Kalkara), which was fortified with Fort Ricasoli (Forti Rikażli) in the 17th century. The Knights quarried out a harbour for galleys from the cliffs beneath Fort Sant Angelo (Forti Sant’Anġlu) on the Birgu Peninsula (today Vittoriosa). They transformed the bay between Birgu and the Senglea Peninsula into their central naval arsenal with quays and magazines, a ropewalk and a sailcloth manufactory. Adjacent to this bay, known today as Dockyard Creek, the order used the neighbouring French Creek for construction and mooring when it began replacing a portion of its galleys with larger, sail-driven ships of the line. However, due to the severe lack of raw materials on Malta, most of these were built in France.

Dockyard Creek also remained the centre of the naval port after Britain occupied the island in 1800. The Royal Navy confiscated the Order’s buildings and added facilities such as a bakery for hardtack – today the Malta Maritime Museum – and several drydocks. With the opening of the Suez Canal in 1869, Malta also became important as a coaling station for commercial ships on the passage to India. This period also saw the founding of the Anglo-Egyptian Bank, construction of a rail line between Valletta and the old capital of Mdina in the interior and a substantial increase in shipbuilding. However, the British themselves only ordered one ship, as the construction time was too long for them.

When the strategic situation after World War II made a base in the Mediterranean superfluous, Britain withdrew from the island, and Malta became independent in 1964. Without government subsidies, the port industry proved to be a chronic loss-maker and new sectors were developed, particularly in the areas of electronics and pharmaceuticals. However, industry accounts for only a small part of the island’s gross domestic product.