ABSTRACT
Economists have long recognized the importance of science and technology for long-term economic growth and productivity. As we saw in Chapter 1, both Smith and Marx viewed inventions and innovations as the most dynamic element in the growth of capitalist economies, interacting with capital accumulation, scale economies and expanding markets. Growth theory has traditionally recognized the crucial role of knowledge accumulation in the growth process. Without technological change, capital accumulation will not be sustained – its marginal productivity declining – and the per capita growth rate of the economy will inexorably tend towards zero. The inventions of new machines and intermediate goods provide the opportunities for new investment. Thus, as has been highlighted in the various cases described in Part One, The Rise of Science-related Technology, the introduction, diffusion and continuous improvements of new products and processes has been one of the major factors behind the efficiency gains in those sectors over the post-war period.
