Review of Industrial Organization 17: 1–16, 2000.
© 2000 Kluwer Academic Publishers. Printed in the Netherlands.
The Directions for Technological Change:
Alternative Economic Majorities and Opportunity
JOHN T. SCOTT
Department of Economics, Dartmouth College, Hanover, NH 03755, U.S.A.
Abstract. Governments redirect R&D resources. The government supports R&D in technologies
and in parts of the country that the private sector is unlikely to support, and the government provides
funds for inexperienced businesses and for minority-owned businesses when the private sector will
not. Because the distribution of income and wealth is so unequal, our conventional methods of
evaluating the social usefulness of the redirection of the resources may not work well. Redirection of
R&D resources to meet Schumpeterian and Jeffersonian objectives may actually be efﬁcient despite
generating less economic surplus given the current distribution of income and wealth.
Key words: R&D, small business, technological change, technology policy.
I. Government and the Allocation of Research Resources
After two decades of writing about technological change, I have had the oppor-
tunity to work during the last four years with the Organization for Economic
Cooperation and Development (OECD), the National Institute of Standards and
Technology (NIST), the National Academy of Sciences (NAS), and the National
Science Foundation (NSF) on technology policy questions.
My work with the
This essay was prepared as the Presidential Address to the Industrial Organization Society, for
the Society’s meeting in Boston, January 7, 2000. I thank David Audretsch, Bronwyn Hall, Albert N.
Link, and Stephen Martin, who have been my co-authors for many of the recent studies cited. Special
thanks are due to Albert N. Link who has been my research partner in almost all of the recent projects,
to Nancy A. Scott for discussions about alternative economic majorities, and to Danny Blanchﬂower
and Alan L. Gustman for discussions about the effect of minority ownership. I also thank William L.
Baldwin and William G. Shepherd for their comments on the ﬁrst draft of the essay.
For OECD, I studied ﬁnancial leveraging of public funding of private research. For NIST, I stud-
ied publicly performed R&D in laboratories of that federal laboratory, partially publicly ﬁnanced and
privately performed R&D of NIST’s Advanced Technology Program (ATP), university participation
in ATP projects, and the Baldrige National Quality Award of NIST’s Ofﬁce of Quality Programs. For
the NAS, I studied the DoD’s SBIR program. For NSF, I have studied technology indicators based
on licensing agreements. I am grateful to Jean Guinet of OECD, Gregory Tassey of NIST’s Program
Ofﬁce, Rosalie Ruegg of NIST’s ATP, Charles Wessner of NAS, and John Jankowski of NSF for the
opportunities they have provided.