Nobel Prize in Economic Sciences Goes to Mokyr, Aghion, Howitt

The Royal Swedish Academy of Sciences has awarded the 2025 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to Joel Mokyr, Philippe Aghion, and Peter Howitt for their groundbreaking research explaining how innovation drives sustained economic growth.

The prize is split, with half awarded to Joel Mokyr for uncovering the prerequisites for long-term growth through technological progress, and the other half shared by Philippe Aghion and Peter Howitt for their theory of sustained growth via creative destruction.

Over the past two centuries, the world has experienced sustained economic growth for the first time in history, lifting millions out of poverty and laying the foundation for modern prosperity. The laureates’ work illuminates how technological advances — through new products, production methods, and ideas — continuously replace older ones, fueling ongoing economic development and improving living standards globally.

Historically, economic stagnation was the norm. Despite occasional breakthroughs, growth often plateaued, limiting improvements in living conditions and income. Mokyr, drawing on historical sources, demonstrated that sustained innovation requires more than isolated inventions. For growth to become self-perpetuating, societies must not only know that a technology works but also understand the scientific principles behind it — something that was largely absent before the Industrial Revolution. Mokyr also highlighted the crucial role of open and adaptable societies in nurturing progress.

Aghion and Howitt, meanwhile, developed a formal model in 1992 explaining creative destruction — the process by which new, superior products or technologies replace existing ones. While such innovations drive growth, they also disrupt incumbent companies, creating conflicts between innovators and established interests. Their work emphasizes that managing these tensions constructively is vital to ensure that innovation continues to thrive rather than being stifled by entrenched economic powers.

Collectively, the laureates demonstrate that sustained economic growth is not accidental. It emerges from a continuous cycle of technological advancement, societal openness, and the delicate balance between creativity and disruption. Their insights provide a framework for understanding how innovation shapes economies, raises living standards, and underpins global prosperity.

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