INTRODUCTION People in countries like the United States are richer by a factor of about 10 or 20 than people a century or two ago. Whereas U.S. per capita income today is $33,000, conventional estimates put it at $1800 in 1850. Yet even this difference likely understates the enormous increase in standards of living over this period. Consider the quality of life of the typical American in the year 1850. Life expectancy at birth was a scant 40 years, just over half of what it is today. Refrigeration, electric lights, telephones, antibiotics, automobiles, skyscrapers, and air conditioning did not exist, much less * This is a draft of a chapter for the Handbook of Economic Growth. I am grateful to Philippe Aghion and Paul Romer for helpful comments, and to the National Science Foundation for research support. the more sophisticated technologies that impact our lives daily in the 21st century. Perhaps the central question of the literature on economic growth is "Why is there growth at

This paper investigates a possibly fundamental aspect of technological progress. If knowledge accumulates as technology advances, then successive generations of innovators may face an increasing educational burden. Innovators can compensate through lengthening educational phases and narrowing expertise, but these responses come at the cost of reducing individual innovative capacities, with implications for the organization of innovative activity- a greater reliance on teamwork- and negative implications for growth. Building on this "burden of knowledge " mechanism, this paper first presents six facts about innovator behavior. I show that age at first invention, specialization, and teamwork increase over time in a large micro-data set of inventors. Furthermore, in cross-section, specialization and teamwork appear greater in deeper areas of knowledge while, surprisingly, age at first invention shows little variation across fields. A model then demonstrates how these facts can emerge in tandem. The theory further develops explicit implications for economic growth, providing an explanation for why productivity growth rates did not accelerate through the 20th century despite an enormous

The effect of fiscal policy on capital accumulation and long-run growth continues to be a fundamental issue in macroeconomics. An initial attraction of the endogenous growth model was

Abstract: This paper presents a generalized version of Howitt’s (1999) model of R&Ddriven growth without scale effects and a complete characterization of the long-run growth effects of R&D subsidies. R&D subsidies can either promote or retard long-run economic growth and surprisingly, the growth-retarding outcome occurs for a wide range of plausible parameter values. This paper also presents a new intuitive explanation for why R&D subsidies can have long-run growth effects (both positive and negative).

We revisit the work of Borjas (1995) which has provided an influential positive theory of immigration policy. An important feature of his framework is the focus on the skill-composition of immigrants and we retain this feature in our paper. Our contribution to this literature is to extend his analysis in a number of directions. First, we study the immigration surplus in the context of a general equilibrium model in which capital is endogenous and the welfare of the indigenous population is set out explicitly. Second, we introduce several sectors into the model so that changing the skill composition leads to changes in sector shares. Third, related to the second development, we introduce and R&D sector and develop a model with long-term endogenous growth. The result is that growth effects on the Immigration Surplus come to dominate the purely static effects in the original analysis of Borjas, but they are not sufficient to eliminate the emergence of losers among the section of natives competing with immigrants in the labour market.

During the past 20 years we have witnessed an increase in joint research between universities and Þrms. Nevertheless, this increase, which is largely attributed to the Bayh-Dole Act, has fallen short of expectations. This paper examines the conditions under which a Þrm will Þnd it proÞtable to form an RJV with a university. My results indicate that Þrms, which work on new-technologies, are more likely to form such partnerships. The reason is that these Þrms optimally choose minimal IP protection (lower proÞts), in effectsharingtheirinnovation,soastobeneÞtfrom increased knowledge spillovers. Thereby, the opportunity cost of joining an RJV for Þrms (and universities) working on mature technologies is greater, making such partners unlikely candidates for RJVs. Keywords: Intellectual property, RJV.

This paper presents a simple model of human capital, ideas, and economic growth that integrates contributions from several different strands of the growth literature. The model generates a regression specification that is very similar to that employed by Mankiw, Romer and Weil (1992), but the economics underlying the specification is very different. In particular, the model emphasizes the importance of ideas and technology transfer in addition to capital accumulation. The model suggests that cross-country data on educational attainment is most appropriately interpreted from the macro standpoint as something like an investment rate rather than as a capital stock. Finally, this setup helps to resolve a puzzle recently highlighted by the empirical growth literature concerning human capital and economic growth by following Bils and Klenow (1996) in emphasizing a relationship between wages and educational attainment that is consistent with Mincerian wage regressions.

Patents act as an incentive to innovate. However, as this paper argues, patents can lead the patent holder to rest on his laurels and at the same time discourage some innovators from innovating, reducing knowledge spillovers. The combined result of the above suggests an inverse U relationship between patent protection and output growth.

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This paper studies the effects of market competition and intellectual property protection in emerging technologies such as software. In doing so, this research aims at contributing to the ongoing discussion on the possibility of broadening the scope of patent protection, in the EU, in order to cover many of the newly evolving technologies. The model indicates that optimal patent protection is case specific, while its degree of protection should vary depending on the rate of growth of the particular technology, as well as the degree of market competition. The main argument of the paper is that intellectual property protection has a dual effect, allowing the innovator to fully appropriate his R&D, at the cost of limiting the number of innovators who will be able to innovate, reducing knowledge spillovers