Stockholm, Sweden – On Monday, October 13, 2025, the Royal Swedish Academy of Sciences announced that the 2025 Nobel Memorial Prize in Economic Sciences has been awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt for their groundbreaking contributions to understanding innovation-driven economic growth. The prestigious award, officially known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, recognizes the trio’s transformative work in explaining how technological progress and creative destruction drive sustained economic development. The prize is divided, with one half awarded to Mokyr “for having identified the prerequisites for sustained growth through technological progress” and the other half jointly to Aghion and Howitt “for the theory of sustained growth through creative destruction.”
Joel Mokyr: Unraveling the Historical Roots of Economic Growth
Joel Mokyr, a distinguished professor of economics and history at Northwestern University, has spent decades exploring the economic history of Europe, with a particular focus on the transformative period between 1750 and 1914. His work has illuminated the cultural, institutional, and intellectual preconditions that enabled the Industrial Revolution and subsequent waves of technological progress. Mokyr’s research emphasizes the role of ideas, knowledge, and institutions in fostering long-term economic growth.
Mokyr’s seminal contributions include his exploration of the “culture of growth,” a concept he detailed in his influential book, A Culture of Growth: The Origins of the Modern Economy (2016). He argues that the Enlightenment era’s intellectual openness, coupled with institutional frameworks that encouraged innovation, created a fertile ground for technological advancements. These advancements, in turn, propelled unprecedented economic growth. Mokyr’s work highlights how a society’s willingness to embrace new ideas, combined with mechanisms to disseminate knowledge, such as scientific societies and printing presses, laid the foundation for sustained progress.
The Royal Swedish Academy of Sciences praised Mokyr for identifying the “prerequisites for sustained growth through technological progress.” His research demonstrates that economic growth is not merely a function of capital accumulation or labor inputs but is deeply tied to the interplay of ideas, institutions, and human capital. By examining historical case studies, such as the technological leaps during the Industrial Revolution, Mokyr has shown how cultural and institutional factors can either foster or hinder innovation. His insights have profound implications for modern policymakers seeking to create environments conducive to technological advancement and economic prosperity.
Mokyr’s work also underscores the importance of interdisciplinary approaches, blending economic theory with historical analysis. His ability to connect past economic transformations with contemporary challenges has made his research a cornerstone in the field of economic history. The Nobel Committee noted that Mokyr’s findings provide a framework for understanding why some societies thrive through innovation while others stagnate.
Philippe Aghion and Peter Howitt: The Theory of Creative Destruction
The other half of the 2025 Nobel Prize in Economics was awarded jointly to Philippe Aghion, a professor at the Collège de France and the London School of Economics, and Peter Howitt, a professor of economics at Brown University. Their collaborative work has advanced the theory of “creative destruction,” a concept originally introduced by economist Joseph Schumpeter. Aghion and Howitt’s research provides a rigorous framework for understanding how innovation disrupts existing economic structures while simultaneously driving long-term growth.
Creative destruction refers to the process by which new technologies and business models render old ones obsolete, leading to economic transformation. Aghion and Howitt’s work builds on this idea by developing mathematical models that explain how innovation leads to sustained economic growth. Their seminal contribution, often referred to as the Aghion-Howitt model, integrates Schumpeter’s insights into modern economic growth theory. Their 1992 paper, “A Model of Growth Through Creative Destruction,” published in Econometrica, formalized the relationship between innovation, competition, and economic progress.
The Aghion-Howitt model posits that economic growth is driven by entrepreneurs who innovate, creating new products or processes that displace outdated ones. This process generates temporary monopolies for innovators, incentivizing further research and development. However, these monopolies are eventually eroded by subsequent innovations, perpetuating a cycle of creative destruction. The model highlights the dynamic interplay between competition and innovation, showing how policies that balance monopoly power with competitive pressures can foster sustained growth.
Aghion’s research focuses on the economics of growth, exploring how institutions, market structures, and policies influence innovation. His work emphasizes the role of flexible labor markets, access to finance, and intellectual property rights in encouraging entrepreneurial activity. Aghion has also investigated how economic inequality and globalization affect innovation-driven growth, offering insights into the challenges of sustaining progress in an interconnected world.
Howitt, whose expertise lies in macroeconomics and monetary economics, has complemented Aghion’s work by examining the macroeconomic implications of creative destruction. His research explores how innovation affects aggregate economic variables, such as productivity, employment, and income distribution. Howitt’s contributions have helped bridge microeconomic theories of innovation with macroeconomic outcomes, providing a comprehensive understanding of how technological progress shapes economies over time.
The Nobel Committee lauded Aghion and Howitt for their “theory of sustained growth through creative destruction,” noting that their models have become foundational in the study of economic growth. Their work has practical implications for designing policies that promote innovation while mitigating the disruptions caused by technological change, such as job displacement or economic inequality.
Implications for the Modern World
The awarding of the 2025 Nobel Prize in Economics to Mokyr, Aghion, and Howitt underscores the critical role of innovation in driving economic progress. Their combined work offers a comprehensive view of how societies can achieve sustained growth by fostering environments that encourage technological advancement. Mokyr’s historical perspective highlights the importance of cultural and institutional factors, while Aghion and Howitt’s theoretical models provide a roadmap for understanding the dynamics of innovation in modern economies.
In today’s rapidly changing world, their insights are more relevant than ever. The rise of artificial intelligence, renewable energy, and biotechnology presents both opportunities and challenges for economic growth. Policymakers face the task of creating frameworks that incentivize innovation while addressing its social and economic consequences. For instance, fostering a culture of openness to new ideas, as Mokyr advocates, can help societies adapt to technological change. Similarly, Aghion and Howitt’s work suggests that policies promoting competition and entrepreneurship are essential for sustaining innovation-driven growth.
The Nobel Committee’s decision also reflects the growing recognition of interdisciplinary approaches in economics. Mokyr’s integration of history and economics, combined with Aghion and Howitt’s blend of microeconomic and macroeconomic perspectives, demonstrates the value of diverse methodologies in tackling complex economic questions. Their work has inspired a new generation of economists to explore the interplay between innovation, institutions, and economic outcomes.
The Nobel Prize and Its Significance
The Nobel Memorial Prize in Economic Sciences, established in 1968 by Sweden’s central bank, is awarded annually to individuals who have made outstanding contributions to the field of economics. The 2025 prize, which includes a monetary award of approximately $1.1 million (shared among the laureates), recognizes the profound impact of Mokyr, Aghion, and Howitt’s work on our understanding of economic growth.
The announcement was made at a press conference in Stockholm, where the Royal Swedish Academy of Sciences highlighted the laureates’ contributions to both academic research and public policy. The committee emphasized that their work provides a foundation for addressing some of the most pressing economic challenges of the 21st century, from fostering innovation to managing the disruptions caused by technological change.
Profiles of the Laureates
Joel Mokyr, born in 1946 in Leiden, Netherlands, is a professor of economics and history at Northwestern University. He is the author of numerous books, including The Lever of Riches (1990) and The Gifts of Athena (2002), which explore the historical drivers of technological progress.
Philippe Aghion, born in 1956 in Paris, France, holds positions at the Collège de France and the London School of Economics. His extensive research on growth economics has earned him widespread recognition, including the Yrjö Jahnsson Award in 2001.
Peter Howitt, born in 1946 in Canada, is a professor of economics at Brown University. His work on macroeconomics and growth theory has been influential in shaping modern economic thought.
Conclusion
The 2025 Nobel Prize in Economics celebrates the transformative contributions of Joel Mokyr, Philippe Aghion, and Peter Howitt to our understanding of innovation-driven economic growth. Their work provides critical insights into the historical, institutional, and theoretical factors that enable societies to thrive through technological progress. As the world navigates an era of rapid technological change, their research offers valuable lessons for fostering innovation, promoting competition, and ensuring sustained economic prosperity.
