Nobel Prize in Economic Sciences 2025 Awarded for Research on Innovation-Driven Growth
The 2025 Nobel Prize in Economic Sciences was awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt. Mokyr was recognized for identifying the prerequisites for sustained growth through technological progress, emphasizing the role of 'useful knowledge.' Aghion and Howitt were honored for their 'theory of sustained growth through creative destruction,' which explains how new innovations replace older technologies, leading to economic gains but also the destruction of incumbents. Their research provides a mathematical model to determine optimal R&D investment and suggests that governments should subsidize R&D to ensure long-term societal benefits and overcome resistance from established interest groups.
Key Points
- Joel Mokyr distinguished between propositional knowledge (natural world) and prescriptive knowledge (instructions/recipes).
- The theory of 'creative destruction' posits that innovation leads to growth but also displaces existing technologies and interests.
- The research suggests that R&D should be subsidized because private firms may not invest enough if they cannot capture all the value.
- Sustained growth requires a society open to change and the translation of propositional knowledge into practical products.
Exam Facts
- 2025 Nobel Laureates: Joel Mokyr, Philippe Aghion, Peter Howitt
- Key concept: Creative Destruction
- Awarding body: Royal Swedish Academy of Sciences
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