Financing Innovation in the United States, 1870 to the Present

Although technological change is vital for economic growth, the interaction offinance and technological innovation is rarely studied. This pioneering volume examines the ways inwhich innovation is funded in the United States. In case studies and theoretical discussions,leading economists and economic historians analyze how inventors and technologically creativeentrepreneurs have raised funds for their projects at different stages of U.S. economic development,beginning with the post-Civil War period of the Second Industrial Revolution. Their discussionspoint to intriguing insights about how the nature of the technology may influence its financing and,conversely, how the availability of funds influences technological advances.These studies show thatover the long history of American technological advancement, inventors and innovators have shownconsiderable flexibility in finding ways to finance their work. They have moved to cities to findgroups of local investors; they have worked for large firms that could tap the securities market forfunds; they have looked to the federal government for research and development funding; and theyhave been financed by the venture capital industry. The studies make it clear that methods offunding innovation--whether it is in the auto industry or information technology--have importantimplications for both the direction of technological change and the competitive dynamism of theeconomy.

William H. Janeway is Vice Chairman of Warburg Pincus and a member of the Board of Directors of the Social Science Research Council.