In models where economic growth is determined by technological change and resources devoted to activities which change technology, the scope for economic policies to increase growth is limited. Examples from experiences with policies and growth in Chile and in Argentina are used to develop an alternative framework to measure and understand the role of policies in influencing economic growth. To examine this role of policies, it is necessary to show the channel through which they effect growth. Using a choice-of-techniques model of endogenous technological change, this research argues that policies have both a direct effect on productivity, which wOrks through resource allocation, as well as an indirect effect which works through resource accumulation.