Endogeneity in twentieth-century science and technology
My purpose in this chapter is to suggest that both science and technology have been rendered a great deal more endogenous in the course of the twentieth century. I am not merely saying that science and technology have come to play roles of increasing importance in the economic life of advanced industrial economies, which is obvious. I am suggesting that this increasingly important role has been a direct consequence of institutional changes and associated changes in economic incentives. The manner in which new knowledge is transformed into goods and services of commercial value has become more directly connected to decision making processes on the part of maximizing agents responding to signals transmitted by normal market forces. I will develop my case primarily by drawing upon the American experience, but I would not want to be interpreted as suggesting that the American experience is necessarily representative of that of other industrial economies. The American experience, and the shaping of some of its dominant institutions, such as its universities, have differed in some significant ways from those of other industrial economi·es.