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Unlocking Prosperity: 2025 Nobel Prize in Economics Celebrates Theories of Growth
Stockholm, Sweden – The Royal Swedish Academy of Sciences has awarded the 2025 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to three economists whose work collectively explains the engine of modern prosperity. The prestigious award recognizes Joel Mokyr for his historical insights into the prerequisites for technological progress, and Philippe Aghion and Peter Howitt for their foundational theory on growth through creative destruction.
The prize is shared by Joel Mokyr of Northwestern University, and the collaborative duo of Philippe Aghion from the Collège de France and Peter Howitt from Brown University. Their distinct yet complementary research weaves together a powerful narrative of how societies create the conditions for innovation and then harness its disruptive power for long-term growth.
Joel Mokyr: Identifying the “Culture of Growth”
For centuries, the key to sustained economic growth remained a puzzle. Joel Mokyr receives the 2025 Economic Sciences Nobel “for having identified the prerequisites for sustained growth through technological progress.” His work shifted the focus from simple capital and labor to the cultural and institutional foundations necessary for innovation to thrive.
Through meticulous historical analysis of Europe, particularly during the Enlightenment, Mokyr identified a “culture of growth.” This was an environment where scientific inquiry was valued, new ideas were debated in a “market for ideas,” intellectual property was protected, and innovators were encouraged to challenge the status quo. Mokyr’s research teaches us that brilliant inventions are not enough; a society needs the right ecosystem—supportive universities, robust patent laws, and political stability—to translate those inventions into widespread economic progress.
Aghion and Howitt: The Engine of Creative Destruction
While Mokyr identified the fertile soil, Philippe Aghion and Peter Howitt built the engine. They are awarded the Nobel Prize “for the theory of sustained growth through creative destruction.” Building on the concepts of economist Joseph Schumpeter, they developed a formal Schumpeterian growth theory, also known as endogenous growth theory.
Their elegant models show that long-term economic growth is not a smooth, predictable path. Instead, it is driven by a constant, churning process of innovation. New technologies and business models (the “creative” part) are introduced by entrepreneurs seeking profits, which in turn renders old technologies obsolete (the “destruction” part). This process—where smartphones replace landlines and e-commerce disrupts traditional retail—is not a bug in capitalism; it is its central feature. Aghion and Howitt demonstrated that this relentless cycle of innovation is the primary engine of rising living standards.
A Unified Lesson for a Global Economy
Together, the 2025 laureates provide a complete framework for understanding modern prosperity. Mokyr explains the cultural and institutional bedrock required, while Aghion and Howitt detail the dynamic, competitive process that unfolds on that foundation. Without Mokyr’s “culture of growth,” the incentives for Aghion and Howitt’s “creative destruction” would simply not exist.
These lessons are critically important for policymakers worldwide. For developing nations, the message is to build institutions that protect innovators and foster a culture of open inquiry. For advanced economies, it is a reminder to avoid complacency and ensure that competition remains vibrant, allowing the process of creative destruction to continue unimpeded.
This year’s Sveriges Riksbank Prize in Economic Sciences is more than a recognition of past academic achievement; it is a roadmap for future prosperity, highlighting that the choice to embrace knowledge, innovation, and change is the ultimate source of sustained growth.
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