Nobel Prize in Economics 2025: Joel Mokyr, Philippe Aghion and Peter Howitt named laureates

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Innovation as the Engine of Prosperity: Why the 2025 Economics Nobel Matters Now

By Prof. Andrii Azarov, International Business Academy Consortium (IBAC)

The Royal Swedish Academy of Sciences has awarded the 2025 Prize in Economic Sciences in Memory of Alfred Nobel to Joel Mokyr, Philippe Aghion and Peter Howitt “for explaining innovation-driven economic growth”. The monetary award is SEK 11 million: half goes to Mokyr; Aghion and Howitt share the other half equally. The decision was announced in Stockholm on 13 October 2025.

Why these three

The laureates connect the deep mechanics of long-run prosperity to technological change and creative destruction—the competitive process through which new products, firms and ideas displace obsolete ones. Their contributions explain:

• How sustained growth became possible after centuries of near-stagnation (Mokyr).
• Which institutional settings amplify or suppress these forces—from open science and engineering competence to competition policy and social insurance.
• How innovation drives productivity at the firm level yet aggregates to a stable growth path (Aghion–Howitt).

Joel Mokyr: the preconditions of sustained growth

Joel Mokyr (Northwestern University) demonstrated that long-run growth rests on a cumulative stock of useful knowledge and the mechanical competence to apply it. He distinguishes between propositional knowledge (understanding how nature works) and prescriptive knowledge (know-how in production). When institutions lower the cost of accessing and exchanging both—learned societies, journals, standards, apprenticeships—and when society tolerates the disruption of new methods, the feedback loop between science and practice accelerates. That is how the world moved from episodic bursts of progress to an era of continuous improvement.

Philippe Aghion & Peter Howitt: growth through creative destruction

Philippe Aghion (Collège de France/INSEAD/LSE) and Peter Howitt (Brown University) formalised a growth paradigm in which innovations replace incumbent technologies. In their framework, entrepreneurs invest in R&D to “escape competition”; successful innovators earn temporary rents; laggards exit or adapt; resources reallocate to higher-productivity uses. Crucially, the model reconciles micro-level turbulence (entry, exit, job reallocation) with macro-level stability (a sustained growth trend), and it illuminates why competition and innovation are linked in a nuanced, often inverted-U relationship: too little rivalry dulls effort; cut-throat rivalry kills returns to R&D.

Why it matters now

With rapid advances in AI, an expensive green transition, and renewed geopolitical fragmentation, the Committee’s choice underscores a simple truth: innovation mechanisms must be deliberately nurtured. Economies that weaken competition, restrict knowledge flows, or entrench incumbents risk a slide into low-productivity equilibria.

Three implications follow:

1. Make markets contestable. Competition policy and open trade enlarge the payoff to invention and diffusion; protectionism shrinks it.
2. Cushion the transition, don’t block it. Social insurance, reskilling and labour mobility are complements to innovation—not substitutes—because creative destruction is beneficial system-wide yet locally painful.
3. Back knowledge infrastructure. Stable funding of basic research, interoperable standards, and open scientific exchange reduce the cost of recombining ideas.

Quick bios

• Joel Mokyr (b. 1946, Leiden): economic historian whose work shows how the accumulation and diffusion of useful knowledge—paired with engineering practice and tolerant institutions—ignite sustained growth; Professor at Northwestern University.
• Peter Howitt (b. 1946, Canada): co-author of the Aghion–Howitt model; Professor Emeritus, Brown University; pioneer of the micro-to-macro link in innovation-led growth.
• Philippe Aghion (b. 1956, Paris): leading scholar of growth, competition and industrial policy; architect of modern Schumpeterian growth theory; Collège de France / INSEAD / LSE.

Five ideas at the core of the prize

1. Innovation drives growth. Capital deepening explains little without a continual flow of new ideas.
2. Scale magnifies incentives. Larger, open markets increase the expected returns to R&D; fragmentation erodes them.
3. Institutions are decisive. Law, education, research infrastructure and a culture that values “useful knowledge” determine whether societies adopt new technology.
4. Creative destruction is productive—and disruptive. Policy should mitigate private losses (through safety nets and mobility) without muting competition.
5. Policy is calibration, not dirigisme. Enforce contestable markets; fund foundational science; use targeted, time-bounded incentives (e.g., for green and digital technologies).

What makes the Economics Prize distinctive

Strictly speaking, this award is not among Alfred Nobel’s original prizes. It was established by Sveriges Riksbank in 1968 for the bank’s 300th anniversary and is conferred under the same rules and ceremonies. The first laureates were Ragnar Frisch and Jan Tinbergen in 1969.

Implications for policy and business

For governments

• Competition & openness: Maintain contestability in product, capital and data markets; avoid creeping protectionism.
• Smart, not sprawling subsidies: Prioritise enabling platforms (testing facilities, compute for AI research, grid flexibility) over firm-specific bailouts.
• R&D architecture: Fund basic research; support translational institutes that bridge labs and factories; simplify IP where diffusion is essential.
• Skills & mobility: Scale apprenticeships and mid-career reskilling in engineering-rich domains; remove barriers to worker and firm entry.

For corporates

• Invest in discovery & deployment. Balance incremental improvements with a portfolio of bets on general-purpose technologies.
• Build with openness. University partnerships, shared testbeds and interoperable standards reduce the cost and time to scale.
• Design for rivalry. Organise internal “neck-and-neck” competition on measurable productivity outcomes, not vanity metrics.

For society

• Fair transitions. Creative destruction creates aggregate gains but local shocks; robust safety nets and portable benefits are complements to innovation.
• Trust in science. Predictable rules for research integrity and data governance sustain the social licence for technological change.

At a glance

• Prize fund: SEK 11 million (Mokyr 1/2; Aghion 1/4; Howitt 1/4) - about 1 million euros. 
• Award ceremony: 10 December, anniversary of Alfred Nobel’s death.
• Announcement: 13 October 2025, Stockholm. 

Official facts about the laureates

Joel Mokyr — The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2025
Born: 26 July 1946, Leiden, the Netherlands
Affiliation at the time of the award: Northwestern University (Evanston, IL, USA); Eitan Berglas School of Economics, Tel Aviv University (Israel)
Prize motivation: “for having identified the prerequisites for sustained growth through technological progress”
Prize share: 1/2

Philippe Aghion — The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2025
Born: 17 August 1956, Paris, France
Affiliation at the time of the award: Collège de France (Paris), INSEAD (Paris), London School of Economics and Political Science (London)
Prize motivation: “for the theory of sustained growth through creative destruction”
Prize share: 1/4

Peter Howitt — The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2025
Born: 31 May 1946, Canada
Affiliation at the time of the award: Brown University (Providence, Rhode Island, USA)
Prize motivation: “for the theory of sustained growth through creative destruction”
Prize share: 1/4

More at the official website: https://www.nobelprize.org/prizes/economic-sciences/

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Editor’s note (100% NEWS): we will continue to track reactions across academia and markets, and how the laureates’ ideas shape economic policy in the EU and the US.

Prepared for the 100% NEWS Information Agency.

 

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Sustained economic growth through technological progress 

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