What is the relationship between core general-purpose technologies (e.g. steam engine, electricity, computers) and the sectors to which they are applied (e.g. railways, radio communications, e-commerce)? There is positive feedback between innovation in core technologies and development and deployment in application sectors. The impact of technological innovation on the macroeconomy is often underestimated. As is the important role of the State in fostering both core technologies and application sectors. Finally, the lecture explores the relationship between innovative firms on the frontier and established firms with channels to markets. This returns to the Schumpeterian question of the source of new inventions, whether firms develop it internally or acquire it externally from other firms. Start-ups with innovative labor are a major source for other firms, validating the role of venture capital in feeding the overall innovation system.