Discoveries on the drivers of economic growth awarded
Never before has humanity experienced such a prolonged period of sustained economic growth as in the past two hundred years. This year’s laureates of the Prize in Economic Sciences, Joel Mokyr, Philippe Aghion, and Peter Howitt, have, through their research, explained why this has been the case.
“A delightful and well-deserved recognition! All three have made significant contributions to the study of long-term economic growth,” says Ola Olsson, Professor of Economics.
In different ways, the laureates show how creative destruction creates conflicts that must be managed in a constructive manner. Otherwise, innovation will be blocked by established companies and interest groups that risk being put at a disadvantage. Their research is useful for explaining transitions to new technologies and industries, such as digitalisation and green industry. It also helps analyse why knowledge and innovation are fundamental to economic growth – from the Industrial Revolution to today’s trends.
“Awarding jointly professors Mokyr, Aghion and Howitt the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2025 is a fantastic recognition of the importance of technology, knowledge, and innovations in promoting economic growth and societal development,” says Maureen McKelvey, Professor of Industrial Management.
She believes the importance of the topic can be seen that this year’s prize is a joint award of approaches which are economic-historical (Mokyr) and mathematical explanations of creative destruction (Aghion and Howitt).
Historical knowledge of technological development
Joel Mokyr has, in several fact-rich books, described how and why technological innovation has emerged throughout history. His most well-known works include “The Lever of Riches” and “The Gifts of Athena: Historical Origins of the Knowledge Economy”.
“His deep historical knowledge of technological development has inspired theoretical growth research and contributed to a greater understanding of how economic prosperity is created,” says Ola Olsson.
Mokyr’s research has explored what enabled the Industrial Revolution. According to him, the spread of innovative ideas at that time was due to enlightenment ideals, which were linked to the scientific revolution in Europe during the 17th and 18th centuries. These fostered a new culture guided by reasoning and observation. An experimental growth culture emerged and spread in what was, for its time, an open and tolerant society.
“His books can be read as an introduction to the importance of knowledge for economic growth, but also as a gateway to understanding the role of technology during the Industrial Revolution,” says Svante Prado, Professor of Economic History.
Svante Prado notes that Mokyr is unusually optimistic in believing that future technologies will have as profound an impact on economic growth as historical ones, such as the steam engine, the internal combustion engine, and information and communication technology.
“If one wishes to be critical, it’s worth mentioning that Mokyr pays very little attention to the negative externalities of growth,” he adds.
Technological progress through deliberate investment
Philippe Aghion and Peter Howitt are best known for their 1992 theoretical growth model, which explains how technological progress arises through deliberate investments in research and the development of improved versions of existing products. In their model, each market is dominated by a leading firm holding the latest patent for a particular machine or input. Other innovators attempt to develop an even better product, and when successful, they obtain a patent and disrupt the previous leader’s market dominance. In this way, technological progress involves “business stealing” and a significant degree of creative destruction.
“Their model is closely related to the ‘endogenous’ growth theory of Paul Romer, who won the prize in 2018, and to Joseph Schumpeter, who already in the 1930s formulated the idea of ‘creative destruction’ in economic development. I’ve taught Aghion and Howitt’s ‘Schumpeterian’ growth model for many years at both master’s and doctoral levels, and their model was important in my early research on growth theory,” says Ola Olsson.
Related research and education at the School
At the U-GOT KIES research centre at the School of Business, Economics and Law, innovation and entrepreneurship are studied with close ties to this year’s economics prize. In 2024, the centre hosted the International Joseph A. Schumpeter Society conference, where more than 200 researchers in transformation, creative change, and economic evolution visited Gothenburg.
The School also runs the master’s programmes Innovation and Industrial Management and Knowledge-based Entrepreneurship, which translate abstract ideas into practical knowledge..
The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2025 i awarded to
One half:
Joel Mokyr, Northwestern University, Evanston, IL, USA
“for having identified the prerequisites for sustained growth through technological progress”
The other half jointly to:
Philippe Aghion, Collège de France och INSEAD, Paris, Frankrike, The London School of Economics and Political Science, Storbritannien och
Peter Howitt, Brown University, Providence RI, USA.
“for the theory of sustained growth through creative destruction”
Philippe Aghion and Joel Mokyr have been guests at the School of Business, Economics and Law.
