The concepts of technological change and productivity growth, which were introduced, but only briefly discussed in Chapter 1, have become commonplace in the vocabulary of those who analyze the economics of science and technology. However, as the title of this volume implies, there is also a critical relationship between technological change and economic performance.
When economists proffer science- and technology-based policy recommendations, they focus their attention on policies that have the potential to increase economic performance. That is not surprising, since economists believe that the primary role of public policy is to enhance economic welfare. Likewise, when policy makers choose among policy alternatives their attention focuses on the economic performance enhancing potential of each initiative in their choice set. Such a focus thus dictates consistency in the use of the underlying concepts.
In this chapter we analyze three related concepts: technological change, productivity growth, and economic performance. Our purpose for beginning with these first principles is twofold. First, we seek to ground the reader in concepts that are fundamental for the remaining chapters. Second, we also want to contribute to the broader academic literature in this regard, since these first principles are frequently ignored. Furthermore, we hope that the discussion that follows may also help to provide some consistency in thought, and therefore in policy, about fundamental issues in science and technology policy.
Researchers have used the concept of technology in a variety of ways. In a narrow sense, technology refers to specific physical or tangible tools, but in a broader sense technology describes whole social processes. In the broader sense, technology refers to intangible tools. Although there are analytical advantages to both the narrow and the more encompassing views, the different uses of the concept of technology invariably promote confusion at both the theoretical, empirical, and policy levels.
A concept of technology that embraces social or intangible entities is beyond the scope of the discussion in this volume. Although important, concepts such as technological ethic or organizational technology are not directly aligned with the