Stockholm: In a momentous announcement from Stockholm on Monday, the Royal Swedish Academy of Sciences awarded the 2025 Nobel Prize in Economic Sciences to Joel Mokyr, Philippe Aghion, and Peter Howitt for their pioneering research that explains how innovation acts as the central engine of economic growth. The trio’s collective work has reshaped modern understanding of how societies evolve through technological change, competition, and creativity.
The Nobel Committee recognized the three economists for their revolutionary contributions to the study of “innovation-driven growth.” Their research explores how new ideas, inventions, and discoveries transform not only industries but entire economies. By integrating the dynamics of technological progress into models of economic development, Mokyr, Aghion, and Howitt have provided policymakers with a deeper framework to understand long-term prosperity.
The award, officially titled the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, carries a prize of 11 million Swedish crowns (approximately USD 1.2 million). The Nobel Committee hailed the trio’s findings as instrumental in bridging the gap between historical analysis, theoretical modeling, and practical policy-making.
Joel Mokyr, a professor at Northwestern University, has long examined how history shapes innovation. His influential works trace how cultural values, scientific attitudes, and institutional frameworks during periods such as the Industrial Revolution laid the groundwork for continuous technological progress. Mokyr’s research has demonstrated that knowledge accumulation, rather than mere capital or labor, is the true foundation of sustained economic growth.
Through his historical lens, Mokyr has shown how societies that nurture intellectual freedom and curiosity are better equipped to foster innovation and long-term prosperity. His insights continue to influence both economic history and innovation policy debates worldwide.
The dynamic duo of Philippe Aghion and Peter Howitt are best known for developing the theory of “creative destruction,” a concept originally proposed by Joseph Schumpeter and refined through their mathematical models. Their framework illustrates how the process of innovation where new technologies replace outdated ones drives economic progress while simultaneously disrupting existing industries.
Aghion, a professor at the Collège de France, has advanced models linking innovation to competition and policy design. His work emphasizes how the right mix of incentives, education, and openness to competition can stimulate research and entrepreneurship. Peter Howitt, an emeritus professor at Brown University, collaborated closely with Aghion to develop the “Schumpeterian growth model,” now a cornerstone of modern growth theory.
Together, Aghion and Howitt’s models explain how economies evolve through cycles of invention and renewal where progress is born from the very destruction of the old.
The 2025 Nobel recognition comes at a time when technological advancement is reshaping global economies from artificial intelligence and renewable energy to biotechnology and automation. The laureates’ work offers a vital roadmap for policymakers navigating these transformations. Their theories highlight that innovation thrives where markets remain open, competition is fair, and education systems cultivate creativity.
The Nobel Committee emphasized that understanding innovation is essential not just for economic growth but for ensuring that technological change benefits society as a whole. Their research helps explain why some nations accelerate toward prosperity while others stagnate, offering lessons that resonate deeply in a world facing digital divides and rapid automation.
The Nobel Prize in Economics is traditionally the final award of the Nobel season, marking the close of a week celebrating human achievement in peace, science, literature, and the arts. With this year’s prize, the Royal Swedish Academy spotlighted the enduring power of ideas showing that economic progress is not merely built on wealth or resources, but on the creativity and innovation of people.
As the laureates prepare to receive their medals and diplomas in December at the Stockholm Concert Hall, their legacy stands as a testament to the transformative force of innovation a reminder that the engine of progress begins in the human mind.