The Royal Swedish Academy of Sciences on Monday awarded the 2025 Nobel Memorial Prize in Economic Sciences to Joel Mokyr, Philippe Aghion, and Peter Howitt for their research explaining how innovation drives sustained economic growth.
The trio was recognized “for having explained innovation-driven economic growth.” Joel Mokyr received half the prize “for having identified the prerequisites for sustained growth through technological progress,” while Philippe Aghion and Peter Howitt shared the other half “for the theory of sustained growth through creative destruction.”
Joel Mokyr’s Historical Analysis
Mokyr, a Dutch-Israeli-American economic historian at Northwestern University, examined historical evidence to understand how societies transitioned from economic stagnation to continuous growth. His research demonstrated that technological progress becomes sustainable only when supported by cultures valuing knowledge, experimentation, and openness to change.
Mokyr connected the Industrial Revolution to Europe’s increasing intellectual curiosity and tolerance for new ideas. He argued that innovation requires not merely technical know-how but deeper scientific understanding of underlying principles, enabling societies to build systematically on previous discoveries across generations.
Creative Destruction Theory
Philippe Aghion of Collège de France and Peter Howitt of Brown University developed the influential theory of “creative destruction.” Their 1992 paper mathematically formalized how economic growth occurs through cycles wherein new innovations replace outdated technologies and products.
Building on economist Joseph Schumpeter’s original concept, Aghion and Howitt explained how progress involves simultaneous creation and obsolescence—new companies and technologies emerge while outdated ones disappear. Though sometimes disruptive, this process drives long-term growth by encouraging continuous innovation and competition.
Research Impact
The Nobel committee stated the laureates’ work has enhanced understanding of economic progress roots, influencing government approaches to innovation support, market regulation, and balancing traditional industries with emerging opportunities.
Creative destruction now widely explains how technological revolutions in artificial intelligence, renewable energy, and biotechnology reshape economies. Mokyr’s historical perspective complements this by demonstrating how cultural and institutional openness determines whether societies embrace or resist change.
About the Nobel Prize
Officially titled The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, the award was established in 1968 by Sweden’s central bank. Though not an original Nobel prize, it is presented alongside them annually on December 10, Alfred Nobel’s death anniversary.
Since inception, the economics prize has been awarded 56 times to 96 laureates. The 2024 award went to Daron Acemoglu, Simon Johnson, and James A. Robinson for research on wealth disparities between nations.
