So we all know the word, and the scientists among us can probably define it, but there is still a question that the general public keeps asking: "Why is everybody talking about nanotechnology and spending so much money on it?"

What we are seeing is a global race to keep up with nanotechnology research and development. You only have to look at how technology, and IT in particular, made a huge difference to both the US economy and US military strength to see how crucial any new technology can be.

Nanotechnology is an even more fundamental technology than IT. It not only has the ability to shift the balance of military power - see for example the recent US army efforts at the new Institute for Soldier Nanotechnologies at MIT - but also to affect the global balance of power in the energy markets.

Recent advances in nanocatalysis have enabled China's Shenhua coal company to economically produce diesel directly from coal, whereas before it was cheaper to import oil. If you take into account the current drive to reduce US dependence on Gulf oil, and the fact that the US has the world's largest recoverable coal resources, you can see where an advance in nanotechnology can make a big difference in geopolitical terms. If the price of oil goes above $28 per barrel it will be cheaper to make diesel from coal, and the Shenhua coal reserves alone could produce more oil than the proven reserves of the OPEC countries.

But nanotechnology is already enabling businesses to be more competitive. It's all about increasing margins (chemical industry), improving performance (automotive industry) and even, in the case of the textile industry, turning round old failing industries (see Burlington Industries and Nano-Tex). And this is just the start.

In a nutshell, if Europe, the US, China or Japan can use nanotechnology to do something that other countries cannot, or to do something cheaper or create new markets, then the investment will have paid off.

The above examples are already having a measurable economic effect, and no-one wants to be left behind. Nanotechnology is not about tiny robots, it's about gaining an economic edge. Given the accelerating pace of technological change, by the time companies start to really leverage nanotechnology, playing catch-up will not be an option for the latecomers.

At the moment it's neck and neck between Europe, the US and Japan, with China coming up fast behind. In the long run, it will not be a question of how much money is invested, but how wisely that money is spent.