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The 2025 Nobel Prize in Economic Sciences has    been awarded to Israeli-American Joel Mokyr of North-western University, Philippe Aghion of Collège de France and the London School of Economics, and Peter Howitt of Brown University for their pioneering research

“for having explained innovation-driven economic growth.”

In its press release on October 13, the Royal Swedish Academy of Sciences stated —

“The three economists show how technology can drive sustained growth. Over the last two centuries, for the first time in history, the world has experienced continuous economic expansion. This has lifted vast numbers of people out of poverty and laid the foundations of modern pros-perity.     This year’s laureates Joel Mokyr, Philippe   Aghion, and    Peter     Howitt      explain how    innovation  provides   the impetus for further  progress.”

The 2025 Nobel Prize in Economics carries a total reward of 11 million Swedish kronor, which will be shared among the three winners. One half will go to Joel Mokyr, while the remaining half will be equally divided between Aghion and Howitt.

Contributions of the Three Laureates

The Academy’s statement summarized the individual contributions of the laureates:

Joel Mokyr demonstrated that sustained economic growth is a relatively recent historical phenomenon. For most of human history, economies experienced stagnation punctuated by short bursts of progress. He argued that for innovations to succeed one another in a self-sustaining process, societies must not only know that something works but also understand why it works—an insight that was largely absent before the Industrial Revolution of the mid-18th century. Mokyr also emphasized the critical role of societies being open to new ideas and willing to embrace change.

Philippe Aghion and Peter Howitt explored the mechanisms behind sustained growth through innovation. In their landmark 1992 paper, they developed a mathematical model based on the concept of creative destruction. This idea captures how new and improved products or technologies replace older ones—spurring progress while simultaneously rendering existing firms and industries obsolete. As the Academy explained, “When a new and better product enters the market, companies selling the old version lose out. Innovation is thus both creative and destructive.”

The three economists were jointly recognized because, as the Academy observed, they collectively demonstrated how the process of creative destruction creates inherent conflicts that societies must manage constructively. Their research also underscores that economic growth is not automatic—it depends on continuous innovation and adaptive institutions.

The Concept of Creative Destruction

The term “creative destruction” was first introduced by Joseph Schumpeter in his 1942 classic Capitalism, Socialism and Democracy. Schumpeter argued that innovation is the driving force of economic development—whether through the introduction of new products, new methods of production, the opening of new markets, the acquisition of new sources of supply, or the restructuring of existing industries. This process, he noted, simultaneously destroys old systems and creates new ones—hence the term creative destruction.

However, Schumpeter’s framework was grounded in the context of a free-market economy, where competition drives innovation and the state’s role is limited to supporting private enterprise. In contrast, historical and contemporary experiences—such as those of the former Soviet Union and modern China—demonstrate that state-led innovation and industrial policy can also play a powerful role in driving technological progress and capitalist development.

Relevance of the 2025 Nobel Selection

While the Nobel Committee did not explicitly comment on the contemporary significance of this year’s selection, many observers see a broader message. In an era marked by rising protectionism, trade barriers, and political resistance to scientific advancement, the global environment for innovation has become increasingly constrained.

By recognizing research that highlights the importance of open competition and innovation for sustained growth, the 2025 Nobel Prize in Economics may serve as a wake-up call to world leaders—reminding them not to turn away from the historical trajectory of global economic and technological progress.