GENERAL-PURPOSE TECHNOLOGIES - ENGINES OF GROWTH

Whole eras of technical progress and growth appear to be driven by a f ew 'General Purpose Technologies' (GPT's), such as the steam engine, t he electric motor, and semiconductors. GPT's are characterized by perv asiveness, inherent potential for technical improvements, and 'innovat ional complementarities', giving rise to increasing returns-to-scale. However, a decentralized economy will have difficulty in fully exploit ing the growth opportunities of GPT's: arms-length market transactions between the GPT and its users may result in 'too little, too late' in novation. Likewise, difficulties in forecasting the technological deve lopments of the other side can lower the rate of technical advance of all sectors.