In recent years economists have attempted to estimate the private and social rates of return from investments in education. Another area that must be considered is the effect of education on the rate of technological change and on capital formation. Still another factor that must be taken into account is the organization of education and research and development (R&D). Because education contributes to economic growth by influencing the rate of diffusion of innovations and because American educational institutions influence the diffusion process directly as well as via their students, government and industry must cooperate to develop R&D efforts that focus on future demands and training programs for researchers and scientists. Among the types of studies that are particularly needed are the following: econometric productivity studies that include education; investigations of the educational level of inventors; examinations of the effect of educational levels on the nature and shape of learning curves; analyses of the relationship between the educational level and speed of response to innovations; and constructions of simple mathematical models relating educational levels, the rate of diffusion of new technology, and the rate of economic growth. (This analysis is one in a series on the relationship between education and productivity.) (MN)