position in the world may slip before too many years into a second-class role, and that growth in living standards will be inadequate to address the many social problems and inequities that exist today. The proper remedy, as pointed out in this paper, is becoming quite clear, but it will require patience, determination, and leadership, a change in fundamental perceptions of national priorities, and abandonment of obsolete economic theories and perspectives.



In this article, the use of "we" implies references not only to my work, but to other work (or experience) done (or had) at Stanford and Harvard universities. I am particularly indebted to the directors of the programs on technology and growth, Nathan Rosenberg and Lawrence Lau (Stanford) and Dale Jorgenson (Harvard), with whom I serve as codirector of both programs. Thanks are also due to Paul Romer of Chicago and Timothy Bresnahan, Steven Durlauf and John Shoven of Stanford. However all errors are my sole responsibility.


As a consequence of the current account deficit; in addition, central bank transactions may have resulted in perhaps another $50 billion inflow.


See Denison (1957, 1962, 1967, 1972, 1979, 1985).


See Griliches (1979, 1988), Griliches and Jorgenson (1967, 1972a, 1972b).


See Jorgenson, Gollop, and Fraumeni (1987); Jorgenson, Kuroda, and Nishimizu (1986); and Jorgenson (1988).


See Kendrick (1961, 1973, 1976, 1983) and Kendrick and Grossman (1980).


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