? on the one hand, the diffusion of scientific and technological research throughout the world potentially benefits everyone by increasing the pace of innovation globally. for example, the development of the polio vaccine in the united states in the 1950s provided enormous benefits to people globally, not just americans. moreover, in a globalized economy, product and process innovations in one country can lead to employment opportunities and improved goods and services around the world. on the other hand, in some circumstances, the location of r & d activity can matter. for example, technological prowess may help a country reap the financial and employment benefits of leadership in a strategic industry. a cutting - edge scientific or technological center can create a variety of spillovers that promote innovation, quality, skills acquisition, and productivity in industries located nearby ; such spillovers are the reason that high - tech firms often locate in clusters or near leading universities. 13 to the extent that countries gain from leadership in technologically vibrant industries or from local spillovers arising from inventive activity, the case for government support of r & d within a given country is stronger. 14 how should governments provide support for research and development? the economic arguments for government support of innovation generally imply that governments should focus particularly on fostering basic, or foundational, research. the most applied and commercially relevant research is likely to be done in any case by the private sector, as private firms have strong incentives to determine what the market demands and to meet those needs. 15 if the government decides to foster r & d, what policy instruments should it use? a number of potential tools exist, including direct funding of government research facilities, grants to university or private - sector researchers, contracts for specific projects, and tax incentives. moreover, within each of these categories, many choices must be made about how to structure specific programs. unfortunately, economists know less about how best to channel among organisation for economic co - operation and development ( oecd ) nations, the united states is estimated to have spent the most on r & d in 2010, followed by japan, germany, south korea, france, and the united kingdom ( battelle and r & d magazine, 2010 ). as a percentage of gdp, israel ranked first among oecd nations in r & d spending, followed by finland, sweden, japan, and south korea ( oecd, 2010 ). china ’ s gross r & d expenditures are estimated to have increased more than five - fold between 1997 and 2007 and, by

t t mboweni : developments in the foreign exchange markets during the last couple of years speech by mr t t mboweni, governor of the south african reserve bank, at the cocktail function in honour of the aci south africa, pretoria, 20 september 2004. * * * ladies and gentlemen, welcome to the south african reserve bank. we thank you for being here this evening, and we feel honoured that you should have accepted our invitation. as most of you are engaged in the foreign exchange markets, we thought that it might be useful to make a few remarks on our involvement in the markets and refer to recent developments in this regard. we think that you are an important and critical constituency as far as our work is concerned, and it is only correct and proper that from time to time we should come together to exchange views and interact with one another. allow me to congratulate aci south africa for being selected to host the aci council meeting in sandton from the 23rd to 27th november this year. it will be the first time that this prestigious event will be held in south africa. we wish you good luck with the organisation of that event and we are certain that you will do us proud! we have also noted from your website that you are also taking this opportunity to draw attention to the " sights and sounds " of our beautiful country. we are also aware of the important role, which the aci is playing in actively promoting the educational and professional interests of the financial markets. in particular, the active role in the education of dealers with a view to establishing an accreditation standard and developing the technical skills and knowledge of financial market dealers in south africa and africa as a whole is to be appreciated. it is assumed here that as an organisation you are also an active participant in the financial services charter process. we also admire your efforts in compelling your members to maintain the professional level of competence and the ethical best practices of loyalty as set out in your model code. we strongly support all your attempts to promote professional and ethical behaviour in south africa as these are essential in building credible international trading relations, and in establishing, maintaining and enhancing the reputation of our financial markets. our remarks this evening will focus on developments in the foreign exchange markets during the last couple of years. a good starting point appears to be the last time we met with you as an organisation here at the central bank. what were the big issues at the time of the last aci cocktail? just to touch on a few issues