KNOWLEDGE CREATION, ENTREPRENEURSHIP, AND ECONOMIC GROWTH Bo Carlsson (corresponding author) Department of Economics, Case Western Reserve University 111 19 Bellflower Road, Cleveland, Ohio 44106-7235 Tel. (216) 368-4112, fax (216) 368-5039, e-mail Bo.Carlsson@case.edu Zoltan J. Acs School of Public Policy, George Mason University Fairfax, VA 22030-4444 Tel. (703) 993-1780, fax (703) 993-2284, e-mail zacs@gmu.edu David B. Audretsch Department Entrepreneurship, Growth and Public Policy, Max-Planck Institute for Research into Economic Systems, Jena, Kahlaische Strasse 10, 07745 Jena, Germany e-mail audretsch@mpiew-jena.mpg.de Pontus Braunerhjelm Department of Transport and Economics, Royal Institute of Technology 100 44 Stockholm, SWEDEN Tel. +46 (8) 790 9114, e-mail pontusb@infra.kth.se February 2008 This paper explores the relationship between knowledge creation, entrepreneurship, and economic growth in the United States over the last 150 years. Distinguishing between general knowledge and economically useful knowledge, we examine the changes over time in the locus and content of new knowledge creation: the role of universities, particularly engineering schools and Land Grant universities, industrial laboratories, and corporate R&D laboratories prior to World War II. The practical orientation of U.S. academic R&D and the close research interaction between academia and industry are noted. We study the unprecedented increase in R&D spending in the United States during and after World War II and how it was converted into economic activity via incumbent firms in the early postwar period and increasingly via new ventures in the last few decades. Keywords: knowledge, knowledge filter, economic growth, entrepreneurship, history JEL codes: O14, O17, O30, N90