Nobel Prize in Economic Sciences Awarded for Innovation-Driven Growth 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 work on innovation-driven economic growth. Their research has significantly enhanced the understanding of how technological advancements and the process of "creative destruction" fuel sustained economic development.

Joel Mokyr, an economic historian at Northwestern University, received half of the prize for his analysis of the cultural and institutional factors that have historically led to sustained economic growth. His work emphasizes the importance of scientific understanding and societal openness to new ideas as catalysts for continuous innovation. Mokyr's research highlights how the interplay between scientific explanations and practical applications has created a self-generating process leading to sustained economic growth. (nobelprize.org)

The other half of the prize was jointly awarded to Philippe Aghion, affiliated with the Collège de France, INSEAD, and the London School of Economics, and Peter Howitt of Brown University. Together, they developed a mathematical model of "creative destruction," illustrating how new technologies and products replace outdated ones, driving economic growth through continuous innovation. Their model provides a framework for understanding how innovation, spurred by competition and dynamic market structures, drives economic growth from within the economy rather than from external forces. (nobelprize.org)

The concept of "creative destruction," originally introduced by economist Joseph Schumpeter, describes the process by which new innovations replace and render obsolete older technologies, leading to economic development. Aghion and Howitt's work has been instrumental in providing a mathematical foundation for this concept, demonstrating how the continuous cycle of innovation and obsolescence drives long-term economic growth. (en.wikipedia.org)

The Royal Swedish Academy of Sciences emphasized that economic stagnation has historically been the norm, and the laureates' work shows the necessity of fostering environments conducive to technological advancement to sustain growth. Their research underscores the importance of policies that promote competition, research, and openness to new ideas as essential for continuous economic development. (nobelprize.org)

In response to the award, Mokyr expressed concern over policies that may hinder scientific research and education, warning that such actions could impede innovation and economic growth. Aghion highlighted the risks of de-globalization and protectionist tariffs as obstacles to growth, urging for a balance between competition and industrial policy in fields like artificial intelligence and biotechnology. Howitt echoed concerns over trade policies that reduce global market size, noting that such measures can stifle innovation and that reshoring manufacturing is not an effective economic strategy. (reuters.com)

Prior to this Nobel recognition, Aghion and Howitt were jointly awarded the BBVA Foundation Frontiers of Knowledge Award in Economics in 2019 for their work on innovation and growth. Mokyr has also been honored with the Heineken Award for History in 2006 and the Balzan Prize in 2015 for his contributions to economic history.

The recognition of Mokyr, Aghion, and Howitt underscores the pivotal role of innovation in sustaining economic development. Their collective research offers valuable insights for policymakers and economists worldwide, emphasizing the necessity of fostering environments conducive to technological advancement to ensure continuous economic growth.