Introduction to Modern Economic Growth The models studied in this chapter, like those of the previous chapter, emphasize the importance of profits in shaping technology choices We have also seen the role of monopoly power and patent length on the equilibrium growth rate In addition, the same factors that influenced the equilibrium growth rate in the neoclassical AK model also affect equilibrium economic growth here These include the discount rate, ρ, as well as taxes on capital income or corporate profits Nevertheless, the effect of industrial market structure on equilibrium growth and innovation rates is somewhat limited in the current models because the Dixit-Stiglitz structure and expanding product or input varieties limit the extent to which firms can compete with each other The models of quality competition in the next chapter will feature a richer interaction between market structure and equilibrium growth While the models in this chapter highlight certain major determinants of the rate of technological progress, another shortcoming of these models should be noted The technology stock of a society is determined only by its own R&D Thus technological differences will result simply from R&D differences In the world of relatively free knowledge-flows, many countries will not only generate technological know-how by their own R&D but will also benefit from the advances in the world technology frontier Consequently, in practice, technology adoption decisions and the patterns of technology diffusion may be equally important as, or more important than, R&D rates towards the invention of new technologies Therefore, the major contribution of the models studied in this chapter to our knowledge may be not in pinpointing the exact source of technology differences across countries, but in their emphasis on the endogenous nature of technology and the set of factors that affect technological investments In addition, models of endogenous technological change are essential for understanding world economic growth, since presumably the world technology frontier does largely advance because of R&D Therefore, for our purpose of understanding that world economic growth, the perspectives we have gained on the determinants of technological progress are important Nevertheless, the AK structure of these models implies that they may have relatively little to say about why R&D investments and rapid technological progress has been a feature of the past 200 years, and 599