mies of Sciences and Engineering, the STEP board decided to concentrate initially on the role that saving and investment play in achieving the nation’s long-term economic growth objectives, not only investment in the aggregate but also public and private investment in plant and equipment, physical infrastructure, human capital, research and development, and other categories of the nation’s investment portfolio, the size of these investments, their adequacy, directions of change, and their characteristics in relation to those in other industrialized countries. In undertaking its study, the board sought to evaluate and synthesize a great deal of research and analysis done by other scholars and commentators rather than to undertake new research. Some of the material the board consulted is in the forthcoming volume of papers based on presentations at the board’s conference, “Capital Allocation and Investment Performance in the U.S. Economy,” in September 1992. Although the board did not accept all of the findings and recommendations presented on that occasion, we believe they are thoughtful, present interesting and important evidence, and should stimulate discussion.

In setting its agenda the board was aware that several other organizations, including parts of the Academy complex, were considering the role of government in promoting the development and application of potentially commercial, productivity-enhancing technologies in the corporate sector.1 This work has led to a number of technology policy recommendations that are not reflected in this report because we are convinced that microeconomic intervention will not produce an adequate rate of productivity growth unless the trends in investment, saving, and cost of capital described here are successfully addressed. The board is also aware that there are wide differences in the capacities of corporate managements to handle the accelerating pace of technological change, although recent business literature suggests that the management learning process is accelerating.

Much has happened since the board’s creation. Not only has the economy experienced a prolonged and unusually persistent recession followed by a period of slow growth that only recently has led to significant job creation, but also the private sector has continued to undergo significant restructuring. Manufacturing companies and industries are transforming their structures and becoming flatter, more efficient, and more


For example, the Committee on Science, Engineering, and Public Policy of the National Academy of Sciences/National Academy of Engineering/Institute of Medicine, the Council on Competitiveness, the Competitiveness Policy Council Subcouncil on Technology Policy, and the Computer Systems Policy Project.

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