Trio win Nobel economics prize for work on technology-driven growth
Joel Mokyr, Philippe Aghion and Peter How5t received the 2025 Nobel prize in economics for their research on how technology fuels long‑term growth. Their work on creative destruction, AI, and trade policy arrives as governments grapple with sluggish productivity and rising protectionism.
Three leading scholars of economic growth have been honoured with the 2025 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. The award recognises the combined contributions of Joel Mokyr, Philippe Aghion and Peter Howitt in explaining how technological innovation drives sustained increases in output, living standards and productivity.
Who received the prize and why
Joel Mokyr, a professor of economics at Northwestern University, received half of the 11 million Swedish kronor (approximately £867,000). His research, rooted in economic history, identifies the institutional and cultural conditions that enable societies to translate inventions into lasting growth. Mokyr’s work highlights the importance of education, property rights and open markets in creating an environment where new ideas can flourish.
The remaining half of the prize was split between Philippe Aghion and Peter Howitt. Aghion, a French economist who holds positions at the Collège de France, INSEAD and the London School of Economics, and Howitt, a Canadian‑born scholar at Brown University, are best known for formalising the concept of “creative destruction.” Their models show how the continual replacement of old firms and technologies by newer, more productive ones fuels economic expansion, but also creates short‑term disruption.
Context: growth challenges and the AI boom
The announcement came at a time when policymakers worldwide are wrestling with a decade of tepid growth that began after the 2008 financial crisis. Productivity gains have slowed, wages have stagnated in many advanced economies, and political pressures have intensified around trade, climate policy and the rise of large technology platforms.
In this climate, the Royal Swedish Academy of Sciences highlighted the relevance of the laureates’ research. It noted that the past two centuries of prosperity have been powered by successive waves of technological change—from steam engines to digital computing—and warned that future gains cannot be taken for granted.
Aghion, speaking at the award ceremony, warned of “dark clouds” gathering over the global economy. He cited rising protectionist measures, such as the trade wars initiated under former U.S. President Donald Trump, as barriers that could choke the flow of ideas and capital essential for innovation. He also stressed the need for green‑technology investment and for preventing a handful of tech giants from monopolising emerging markets.
Implications for policy and competition
Both Aghion and Howitt argued that governments must preserve the mechanisms of creative destruction while managing its social costs. Aghion called for stricter competition policies to curb the dominance of “superstar” firms that could deter new entrants. He suggested that regulators design rules that encourage open standards, data sharing and fair access to digital platforms.
Mokyr added that the historical record shows societies that protect intellectual property, support basic research, and maintain open trade networks reap the biggest benefits from innovation. He warned that eroding these foundations—through censorship, restrictive licensing or excessive bureaucracy—could stall the next wave of growth.
These insights arrive as AI technologies, especially large‑language models and generative tools, are reshaping labour markets, productivity measurement and consumer behaviour. The laureates see AI as having “fantastic growth potential,” but they also caution that without thoughtful governance, the technology could exacerbate inequality and concentrate market power.
What comes next?
The Nobel committee’s citation underscores that while the past has shown technology can lift living standards, the future is not predetermined. Countries are now faced with a policy choice: double down on open trade, invest in green and digital research, and enforce competition laws, or risk a slowdown that could deepen social tensions.
For academics, the award revitalises interest in growth theory, prompting new research on how AI, climate mitigation and global supply‑chain redesign intersect with the classic creative‑destruction framework. For businesses, the message is clear: innovation will continue to be the engine of profit, but firms must anticipate tighter scrutiny and a more dynamic competitive landscape.
In the months ahead, the laureates plan to expand public outreach, delivering lectures at major economic forums and advising governments on how to translate theory into actionable policy. Their combined expertise offers a roadmap for navigating the complex trade‑offs between fostering breakthrough technologies and safeguarding inclusive, sustainable growth.
Why it matters
The prize spotlights how innovation, trade openness and competition policy are essential to reviving stagnant economies and ensuring AI benefits society broadly.
Key points
- Joel Mokyr, Philippe Aghion and Peter Howitt won the 2025 Nobel economics prize for research on technology‑driven growth
- Mokyr’s work links institutional quality to long‑run productivity gains
- Aghion and Howitt formalised ‘creative destruction’ as the engine of economic expansion
- The laureates warn against protectionism, tech monopolies and lax competition rules
- Their findings are especially relevant as AI reshapes markets and policy debates
Frequently asked questions
What is the ‘creative destruction’ theory?
Creative destruction, popularised by Aghion and Howitt, describes how new firms and technologies replace outdated ones, driving overall economic growth while causing short‑term disruption.
Why did the Nobel committee highlight AI in the award citation?
AI represents the latest wave of technological innovation, and the committee sees it as a powerful catalyst for future productivity, provided governments manage its competitive and societal impacts.
How does protectionism affect economic growth according to the laureates?
Protectionist policies raise trade barriers, limit the diffusion of ideas and reduce the incentives for firms to innovate, thereby slowing the pace of growth.
