Economists Mokyr, Aghion, and Howitt Awarded Nobel for Innovation Research

On October 13, 2025, the Royal Swedish Academy of Sciences awarded the Nobel Prize in Economic Sciences to Joel Mokyr, Philippe Aghion, and Peter Howitt for their groundbreaking research on innovation-driven economic growth. Their work has significantly advanced the understanding of how technological progress and the process of creative destruction contribute to sustained economic development.

Joel Mokyr, a professor at Northwestern University, received half of the prize for his analysis of the historical conditions that foster technological innovation. His research emphasizes the importance of "useful knowledge"—a deep understanding of why technologies work, not just how they work—as a catalyst for continuous innovation. Mokyr's studies highlight that societies open to new ideas and scientific inquiry are better positioned to achieve sustained economic growth.

The remaining half of the prize was jointly awarded to Philippe Aghion, affiliated with Collège de France, INSEAD, and the London School of Economics, and Peter Howitt of Brown University. In their seminal 1992 paper, Aghion and Howitt developed a mathematical model illustrating the concept of "creative destruction," originally introduced by economist Joseph Schumpeter. Their model demonstrates how new innovations continuously replace outdated technologies, driving long-term economic growth. This process, while fostering progress, also presents challenges as it can render existing products and industries obsolete.

The Royal Swedish Academy of Sciences emphasized that economic stagnation has historically been the norm, and the laureates' work underscores the necessity of fostering environments conducive to innovation to maintain sustained growth. The Academy stated, "Economic stagnation, not growth, has been the norm for most of human history. Their work shows that we must be aware of, and counteract, threats to continued growth."

In response to the award, Philippe Aghion highlighted the critical role of technological leadership in economic power. He noted that the United States maintains its dominance due to its innovative edge in digital technology, artificial intelligence, and biotechnology. Aghion also expressed concerns about protectionist policies and de-globalization trends, warning that such measures could hinder innovation and economic growth.

Joel Mokyr has previously cautioned against policies that may impede scientific research and education, suggesting that such actions could stifle technological progress and, consequently, economic development. He emphasized the importance of maintaining an environment that supports scientific inquiry and the free exchange of ideas to sustain innovation-driven growth.

The laureates' research has profound implications for contemporary economic policy. Their findings suggest that fostering competition, supporting research and development, and maintaining open markets are essential strategies for promoting innovation and preventing economic stagnation. As the global economy faces challenges such as technological disruption and shifting trade dynamics, the insights provided by Mokyr, Aghion, and Howitt offer valuable guidance for policymakers aiming to sustain long-term growth.

The Nobel Prize in Economic Sciences, established in 1968, continues to recognize contributions that deepen the understanding of complex economic phenomena. The 2025 award to Mokyr, Aghion, and Howitt highlights the enduring importance of innovation and the mechanisms that drive economic progress.

As societies navigate the complexities of technological change and globalization, the work of these laureates serves as a reminder of the critical role that innovation plays in shaping economic futures. Their research not only elucidates the processes behind economic growth but also provides a framework for addressing the challenges that accompany rapid technological advancement.