Nobel Prize Spotlight: Innovation and Creative Destruction as Engines of Economic Growth
The 2025 Nobel Prize in Economics honors groundbreaking insights into how innovation and creative destruction drive economic growth, highlighting policy implications for supporting dynamic, equitable economies.
- • Joel Mokyr won half the Nobel Prize for analyzing the Scientific Revolution's role in fostering sustained technological progress.
- • Philippe Aghion and Peter Howitt shared the other half for their model formalizing creative destruction driving economic growth.
- • Their theories emphasize innovation, competition, and creative dynamism over mere capital accumulation as key growth drivers.
- • The laureates advocate policies linking education, innovation, social mobility, and equity to promote sustainable progress.
Key details
The 2025 Nobel Prize in Economics was awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt for their pioneering work on how technological innovation and creative destruction drive sustained economic growth. Mokyr received half the prize for his historical analysis highlighting the Scientific Revolution's role in creating a "culture of progress" that fueled the Industrial Revolution, emphasizing the need for public policy to link education, research, and production to maintain innovation's momentum. Meanwhile, Aghion and Howitt shared the other half for formalizing Joseph Schumpeter's concept of creative destruction within modern growth theory. Their model demonstrates how competition and innovation replace outdated technologies and firms, fostering economic dynamism rather than relying merely on capital accumulation.
The economists collectively stress that growth arises from continuous entrepreneurial dynamism—not government planning—and that policies must support innovation alongside equity, social mobility, and worker protection amid technological transitions. Their work further explores how market structures and competition influence growth rates and firm turnovers across development stages, and how economies nearer to the knowledge frontier benefit more from innovation-led expansion.
This Nobel recognition underscores that sustainable economic growth depends on institutions fostering creativity, open markets, education, and social mobility, while warning against nostalgia for industrial stagnation and emphasizing the necessity of embracing change and innovation. As Mokyr notes, future scientific frontiers like artificial intelligence and biotechnology could trigger new waves of transformative growth.
This article was synthesized and translated from native language sources to provide English-speaking readers with local perspectives.