Robert Solow had concluded that innovation accounted for growth that could not be explained by an increase in labour, land or capital, but he saw innovation as an external force, a slice of luck that some economies had more of than others – his was Mill’s theory with calculus. Things like climate, geography and political institutions determined the rate of innovation – which is bad luck for land-locked tropical dictatorships – and not much could be done about them. Romer saw that innovation itself was an item of investment, that new, applied knowledge was itself a product.
