There is no doubt that scientific advances and technological change have been, are and will remain in the coming years important drivers of the globalisation process.
They have been conducive to the creation, distribution and exploitation (in a positive sense of the word) of knowledge in such a manner that they have served as a major source of competitive advantage, wealth creation and improvement in the quality of life.
The growing impact of ICT (information and communications technologies) on globalisation can be evidenced by the fact that it has led to a rapid application of recent scientific advances in new products and processes, a high rate of innovation across various countries, as well as a shift to more knowledge-intensive industries and services, together with rising skill requirements.
In this day and age there has been a growing realisation that science, technology and innovation have served as the key to improving a nation's economic performance as well as its citizens' social well-being.
For this reason government - irrespective of its political ilk and orientation - must serve as a facilitator, enabling business and consumers to adapt to the demands and opportunities of the new economy.
When talking of globalisation one must not only assess it as a phenomenon but stock must also be taken of its vital and important policy implications.
The impact of policy changes in any one country or region can be translated via global capital markets more quickly to other regions. Particularly since policy changes in the largest areas may have a disproportionate effect on the global economy.
Economic events in one country may have an influence on share prices elsewhere in the world which in turn may change their ability to raise finance and alter wealth in a far-flung country.
Globalisation may have contributed to the emergence of a commonly accepted policy framework but it also means that many countries may be at mutual risk if that policy framework is subsequently found to have significant weaknesses.
As a result of the greater synergy between science, technology and innovation, a new concept has emerged that is best known as MFP - multifactor productivity. This is reflected in greater efficiency in the use of labour and capital.
More rapid MFP growth is generally due to improved managerial practices, organisational change and, most important, to smarter and more innovative ways of producing goods and services.
The increase in MFP is not the only sign of more rapid technological progress. The quality of capital and labour has also increased, due to strong investment in ICT and to the rising skills of the average worker in the world economies.
ICT in particular is a key factor, and has had a strong impact on productivity in several countries, particularly when accompanied by organisational change and better worker skills.
It has also:
¤ helped to improve performance in previously stagnant services sectors;
¤ facilitated communications; and
¤ reduced the costs of transaction;
¤ enabled more extensive networking and co-operation among firms.
The growing role of innovation and technological change can be linked to changes in the innovation process itself.
Innovation also relies much more on networking and co-operation, including between science and industry.
In recent years, investment in research and development (R&D) has risen.
Venture capital has become a major source of funding for new technology-based firms and thus contributes in its own way directly to innovation.
In the services sector which makes up between 60% and 70% of the business sector in OECD economies, the stronger role of technology and innovation can be easily detected.
The services sector is by far the main purchaser of ICT equipment and the performance of several services sectors has been strongly affected by ICT.
ICT is important for industries that process information, such as financial services, but also for areas such as logistics because it makes more efficient transport possible.
Innovation surveys for European countries - both within and outside the EU - show that service firms spend between 1.2% and 4% of their sales on innovation.
While knowledge-intensive services, such as computing and consultancy services, have experienced very rapid growth and are important sources of innovation, technical progress has accelerated in areas where innovation is directly rooted in science, particularly in the IT sector.
It is no coincidence that in many countries leading research universities seek alliances with firms to consolidate their position in innovation networks and to establish their place in the market for knowledge.
Firms now tend to focus on maintaining control of their tacit knowledge - their experience and skills - and have become integrated into networks that provide them with other types of knowledge.
On their part governments now stimulate co-operation among firms and between firms and research institutions, with a view to fostering synergy effects and better exploiting their economies' innovation potential.
Co-operation in ICT has many potential benefits, which include:
¤ an increased scale and scope of activities;
¤ cost and risk sharing;
¤ an improved ability to deal with complexity;
¤ learning effects; and
¤ greater flexibility, efficiency and speed.
ICT has significantly reduced the costs of outsourcing and co-operation and has thus contributed to the increase in networking among firms.
It is also a key technology for speeding up the innovation process and reducing cycle times.
On their part governments constantly need to improve the environment for innovation.
Today companies of all shapes and size have realised that competition is a necessity, with firms investing in innovation and in efficiency enhancing technology if they can expect sufficient returns and if competition forces them to do so.
For all this to succeed we also need to address the HR element. Whether we are talking of education per se, skills upgrading and human resource management at the domestic level.
Initial levels of education are no longer sufficient in an economy in which demands change continuously with lifelong learning becoming increasingly important.
Creativity, working in teams and cognitive skills are needed as economies become more based on innovation.
Malta is no exception.
Mr Brincat is the main Opposition spokesman on foreign affairs and Information Technology.
e-mail: leo.brincat@gov.mt