The Knowledge Filter, Entrepreneurship, and Economic Growth

50 Pages Posted: 21 Oct 2007 Last revised: 20 Dec 2013

Bo Carlsson

Case Western Reserve University - Department of Economics

Zoltan J. Acs

Schar School of Policy and Government

David B. Audretsch

Indiana University - Institute for Development Strategies; King Saud University; WHU - Otto Beisheim School of Management; Indiana University Bloomington - School of Public & Environmental Affairs (SPEA)

Pontus Braunerhjelm

Royal Institute of Technology (KTH) - Department of Infrastructural and Urban Planning (INFRA)

Date Written: September 12, 2007

Abstract

This paper explores the relationship between knowledge creation, entrepreneurship, and economic growth in the United States over the last 150 years. According to the "new growth theory," investments in knowledge and human capital generate economic growth via spillovers of knowledge. But the theory does not explain how or why spillovers occur, or why large investments in R&D do not always result in economic growth. What is missing is "the knowledge filter" - the distinction between general knowledge and economically useful knowledge. Also missing is a mechanism (such as entrepreneurship) converting economically relevant knowledge into economic activity. This paper shows that the unprecedented increase in R&D spending in the United States during and after World War II was converted into economic activity via incumbent firms in the early postwar period and increasingly via new ventures in the last few decades.

Keywords: knowledge, economic growth, entrepreneurship, spillovers, history

JEL Classification: O14, O17, O30, N90

Suggested Citation

Carlsson, Bo and Acs, Zoltan J. and Audretsch, David B. and Braunerhjelm, Pontus, The Knowledge Filter, Entrepreneurship, and Economic Growth (September 12, 2007). Jena Economic Research Paper No. 2007-057; GMU School of Public Policy Research Paper No. 2010-12. Available at SSRN: https://ssrn.com/abstract=1022922 or http://dx.doi.org/10.2139/ssrn.1022922

Bo Carlsson (Contact Author)

Case Western Reserve University - Department of Economics ( email )

Cleveland, OH 44106
United States

Zoltan J. Acs

Schar School of Policy and Government ( email )

Founders Hall
3351 Fairfax Dr.
Arlington, VA 22201
United States
703-993-1780 (Phone)

HOME PAGE: http://home.ubalt.edu/zacs

David B. Audretsch

Indiana University - Institute for Development Strategies ( email )

1315 East Tenth Street
Bloomington, IN 47405
United States
812-855-6766 (Phone)
812-855-0184 (Fax)

King Saud University ( email )

Riyadh, 11451
Saudi Arabia

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Indiana University Bloomington - School of Public & Environmental Affairs (SPEA) ( email )

1315 East Tenth Street
Bloomington, IN 47405
United States

Pontus Braunerhjelm

Royal Institute of Technology (KTH) - Department of Infrastructural and Urban Planning (INFRA) ( email )

SE-100 44 Stockholm
Sweden
+46 8 790 9114 (Phone)
+46 8 411 7436 (Fax)

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