Nobel Prize in Economic Sciences Awarded for Research on Innovation-Driven Growth

On October 13, 2025, the Royal Swedish Academy of Sciences awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to Joel Mokyr, Philippe Aghion, and Peter Howitt for their significant contributions to understanding innovation-driven economic growth.

Joel Mokyr, a professor at Northwestern University, received half of the prize for identifying the prerequisites for sustained growth through technological progress. His research highlights the importance of scientific knowledge and societal openness to new ideas in fostering continuous innovation.

Philippe Aghion, affiliated with Collège de France, INSEAD, and the London School of Economics, and Peter Howitt of Brown University, jointly received the other half of the prize for developing the theory of sustained growth through creative destruction. Their work models how new technologies replace outdated ones, driving long-term economic development.

This recognition underscores the significance of technological innovation and the dynamic processes that underpin sustained economic growth.

The Nobel Committee emphasized that "over the last two centuries, for the first time in history, the world has seen sustained economic growth," attributing this phenomenon to the mechanisms elucidated by the laureates.

Mokyr's work delves into how scientific knowledge and a culture open to new ideas are essential for continuous innovation and economic growth. He argues that in order for growth to become sustained, societies must develop and protect what he calls propositional knowledge—that is, the scientific or theoretical understanding of how things work, not merely trial-and-error fixes. Without that deeper understanding, innovations tend to be isolated or noncumulative, and Mokyr emphasizes that openness to change—a culture that tolerates disruption and allows new ideas to challenge existing power structures—is crucial.

Aghion and Howitt's model of "creative destruction" illustrates how innovation leads to the replacement of outdated technologies, fostering economic dynamism. Their work demonstrates that innovation, stimulated by competition and dynamic market structures, drives growth from within the economy rather than from external forces. This challenged earlier models that treated technological progress as an external factor.

The recognition of these economists underscores the critical role of innovation in driving economic prosperity. Their work informs policymakers on fostering environments conducive to technological advancement and economic growth.

This award highlights a continued emphasis on understanding the mechanisms behind economic growth, building upon previous research in the field.

The Nobel Committee's recognition underscores the critical role of innovation in driving economic growth. The laureates' work provides a framework for understanding and promoting sustained economic development in an ever-evolving global landscape.