Pursuing Problems in Growth

This paper explores the theoretical implications of Schmooklers (1966) argument that a key determinant of technological change is the usefulness of new technologies. There is both historical and empirical support for his argument. The analysis implies that on-going growth depends delicately on a tension between uses for solutions to technological problems and the allocation of resources toward pursuing those solutions. Even alongside an endogenously increasing number of problems pursued, increasing research labor need not increase technology growth or per capita income growth. The results provide reconciliation of stylized facts regarding technological change and growth in the United States and Western Europe.