the opening to international trade have driven the development of large countries : first japan, south korea and the asian tigers ; more recently, china and india. they have raised hundreds of millions of people, a significant share of mankind, from conditions of absolute poverty. for the process to continue, it is important that the opening to market mechanisms and international trade spread from the production and exchange of goods to those of services. financial services offer an extraordinary potential for growth, with benefits for emerging countries that can hardly be overrated. the tumultuous growth of these countries requires a modern financial system that can channel their enormous savings and promote an efficient allocation of capital while raising the consumption of households and allowing them to make better provision for the future in the absence of effective social security cover. the creation of an appropriate institutional framework is a necessary condition for the development of modern financial systems. one of the lessons of the successes of globalization ( and also of the failures, which have not been lacking, especially in sub - saharan africa ) is the role of good institutions : ensuring legal certainty, efficient justice and honest and effective administration is essential for the development of the economy in general. it is especially important for the financial sector, which cannot prosper without the support of fixed and accepted rules, appropriate standards of corporate behaviour, and sufficiently transparent and efficient markets. ensuring the existence of these conditions is not an easy task. it is not only a question of good laws but also, and perhaps above all, of their being applied fully. in many emerging countries it requires a sea change in the culture of administration and in that of economic agents as well. the role played by the governments of these countries is therefore important, but so is that of the international financial institutions, in persuading, assisting and guiding through their example.

if ireland is to become one of the leading r & d performers in the european union. increasing the amount of innovation carried out in this country means not only encouraging indigenous firms to increase their r & d activity but also continuing to attract technology - intensive multinational firms, increasing the amount of r & d activity carried out by these multinationals in ireland and ensuring the diffusion of the technology embedded in foreign multinationals through the rest of the economy. in conclusion, ireland ’ s past productivity performance has been quite good and the productivity potential of the irish economy remains favourable. what i have been pointing out today are areas where we need to do better in light of the recent slowdown in productivity. for a mature economy like ireland, innovation in relation to both products and processes is a key determinant of long - run productivity growth and, therefore, living standards. much has been done in recent years to increase the amount of r & d carried out in this country and improve the innovative capacity of the economy and there is clearly scope for further improvements in this regard. this will be essential if ireland is to enhance its productivity potential and maintain a competitive edge in the changed global economic environment. 4 / 4