UNIDENTIFIED REPORTER, BYLINE: This is PLANET MONEY from NPR.

KAREN DUFFIN, HOST:In the mid-'90s, there was this big new economic theory that was all the rage. It was an idea for how countries can produce unlimited economic growth, which is kind of the whole point of economics. You know, growth means less poverty, more prosperity.

MARY CHILDS, HOST:

For decades, economists had said there are basically just two ways to make an economy grow - invest in capital or in labor, in tangible, mundane things like factories and workers, which means growth is ultimately limited because there are just so many people you can hire or factories you can build.

DUFFIN: But then some economists, most notably Paul Romer, said, actually, there's a third way to grow - innovation. And before this, people thought of innovation as a sort of mysterious force that kind of comes and goes at its own discretion. Read more.