to prepare an analysis of the growth phenomenon and economists'
efforts to elucidate it. This book, whose core chapters were dis-
cussed by BNAC members at three meetings in 1997 and 1998, is
the result.

Throughout much of the nineteenth century and less consis-
tently in the twentieth, economists feared that economic growth
would be choked off by diminishing returns--at first, on the finite
endowments of land suitable for feeding growing populations and
later on scarce energy and metallic mineral resources. These
pessimistic prognoses have been upset repeatedly by the imple-
mentation of innumerable technological innovations. Technological
advances have also made it possible to offer the world's consumers
an array of new goods and services far beyond anything that could
have been imagined two centuries earlier. Scherer traces how econ-
omists came to recognize the key role that technological innova-
tion plays in economic growth and the ways through which
advances in knowledge and technology feed upon themselves in a
kind of virtuous spiral.

As we enter the twenty-first century, questions arise whether
the technology-led economic growth of the past two centuries can
be sustained. Addressing those questions, this book focuses on
two crucial inputs into the processes of technological advance--
capital investment and highly qualified scientists and engineers
(embodying what economists call "human capital"). It char-
acterizes the risks that investors in technological innovations must
surmount and assesses the institutions, and especially the orga-
nized groups providing venture capital to new high-technology
enterprises, that have evolved to embrace those risks. It notes
that the pace of economic growth achieved during the past
two centuries has been accompanied by a high and fairly constant
rate of growth of scientific and engineering effort. It asks whether
such scientific and engineering effort growth rates can be

-vi-