On Monday, the Royal Swedish Academy of Sciences awarded the 2025 Sveriges Riksbank Prize in Economic Sciences to Joel Mokyr, Philippe Aghion, and Peter Howitt for analysing how new technology can drive sustained economic growth.
The award-giving body stated that the three economists were recognised for explaining “innovation-driven economic growth”, identifying “the prerequisites for sustained growth through technological progress”, and for analysing “the theory of sustained growth through creative destruction.”
The academy stated, “Over the last two centuries, for the first time in history, the world has seen sustained economic growth. This has lifted vast numbers of people out of poverty and laid the foundation of our prosperity. This year’s laureates in economic sciences, Joel Mokyr, Philippe Aghion, and Peter Howitt, explain how innovation provides the impetus for further progress.”
The academy explained that Mr Mokyr “used historical sources as one means to uncover the causes of sustained growth becoming the new normal”.
“He demonstrated that if innovations are to succeed one another in a self-generating process, we not only need to know that something works, but we also need to have scientific explanations for why. The latter was often lacking prior to the industrial revolution, which made it difficult to build upon new discoveries and inventions,” the body stated.
Commenting, John Hassler, a member of the Nobel Committee, noted, “Joel Mokyr used historical observations to identify the factors necessary for sustained growth based on technological innovations”.
He added that Messrs Aghion and Howitt jointly studied the mechanisms behind sustained growth, demonstrating how creative destruction leads to conflicts that must be managed constructively.
“Philippe Aghion and Peter Howitt produced a mathematical model of creative destruction, an endless process in which new and better products replace the old,” Mr Hassler said. “In an article from 1992, they constructed a mathematical model for what is called creative destruction: when a new and better product enters the market, the companies selling the older products lose out. The innovation represents something new and is thus creative. However, it is also destructive, as the company whose technology becomes passé is outcompeted.”
