Nobel Nods to Innovation-Driven Growth --- Economics prize cites vital roles of practical input and 'creative destruction'

 

 

“Joel Mokyr, Philippe Aghion and Peter Howitt have been awarded the Nobel Prize for Economic Sciences for their work explaining how innovation and what economists call "creative destruction" drive economic growth.

 

In awarding the prize, the Nobel organization said the three economists had helped deepen the understanding of the drivers of the pickup in economic growth over the past two centuries to levels that are high and relatively stable by historical standards.

 

Mokyr, an economic historian at Northwestern University, said Monday morning that he didn't think he was in the running to win the Nobel.

 

"I got all these congratulatory messages. And I go, is it my birthday today?" said Mokyr, 79. Then he noticed that he had an unanswered call from Sweden.

 

Mokyr, who was awarded half the prize, has studied the process of innovation that drove the industrial revolution and paved the way for the new era of steady growth.

 

Aghion and Howitt, who have constructed mathematical models that help explain how technological change can benefit the economy as a whole even as it harms some existing businesses, were jointly awarded the other half of the prize.

 

Aghion is affiliated with universities in France and the U.K., and Howitt is a professor of economics at Brown University.

 

"This prize is long overdue," said Hans-Joachim Voth, an economic historian at the University of Zurich. "Both Aghion and Howitt, and Mokyr, defined thinking about where technological progress comes from."

 

The work also has a new relevance at a time when enthusiasm over artificial intelligence is running high, and economists are trying to assess how the new technology might shape the economy and society.

 

The nature of the connection between scientific discovery and economic growth had long puzzled economic historians, because big advances in scientific understanding aren't always associated with better economic performance.

 

Mokyr's research helped identify the conditions in the U.K. during the late 18th and early 19th centuries that encouraged the flow of ideas from scientists to inventors and industrialists, and feedback from the practical application of new technologies to scientists.

 

Scientific ideas alone weren't enough: Leonardo da Vinci sketched out a helicopter in the late 15th century, but the skilled mechanics and engineers needed to build it didn't exist. But practical knowledge wasn't enough either: Without an understanding of why something worked, inventions didn't advance.

 

"The scientific revolution didn't do much until it started interacting with more practical knowledge," said Per Krusell, a professor of economics at Stockholm University who also sat on the Nobel committee.

 

Mokyr is optimistic on what AI will do, seeing it as the next phase in the story that began with early computers in the 1950s and 1960s and was continued in the 1980s and 1990s with the personal computer.

 

"AI is going to be to information very much like the computer was in the 50s and 60s, and the personal computer was in the 80s and 90s.”

 

The models that Aghion, 69, and Howitt, 79, created helped explain how change can both end some businesses and give rise to new ones, a process known as creative destruction. They also suggested that sectors in which the rates of creative destruction are high tend to contribute to more rapid growth.

 

Howitt described himself and Aghion as complements in their research, with Aghion's energy and enthusiasm acting as an accelerator, and Howitt occasionally tapping on the brakes. The groundbreaking 1992 paper that led to Monday's Nobel took five years to get published, but from the get-go Aghion was excited about what it meant.

 

"I remember back in 1987 Philippe saying, 'We're going to get a Nobel Prize for this!'" Howitt said.” [1]

 

1. U.S. News: Nobel Nods to Innovation-Driven Growth --- Economics prize cites vital roles of practical input and 'creative destruction'. Hannon, Paul.  Wall Street Journal, Eastern edition; New York, N.Y.. 14 Oct 2025: A2.