Economics Nobel prize won by researchers who showed how science boosts growth
Summary
The 2025 Nobel Prize in Economics has been awarded jointly to Joel Mokyr, and to Philippe Aghion and Peter Howitt, for research that links scientific knowledge, technological innovation and market competition to long-term economic growth. Mokyr emphasised the role of “useful knowledge” — scientifically grounded innovations that enabled systematic technological advances such as during the Industrial Revolution. Aghion and Howitt developed models of “creative destruction”, showing how competitive churn — firms innovating, displacing incumbents and being replaced themselves — sustains growth and shapes incentives for R&D investment. Together their work highlights why state policy, safety nets and targeted R&D support matter for turning innovation into broad-based prosperity.
Key Points
- Laureates: Joel Mokyr (economic historian) and Philippe Aghion & Peter Howitt (economic theorists) share the prize for linking science, innovation and growth.
- Mokyr: Growth depends on “useful knowledge” — scientific understanding that lets innovations be systematically improved rather than discovered by chance.
- Aghion & Howitt: Growth is driven by creative destruction — competition that allows new products and firms to replace older ones, encouraging R&D.
- Market limits: Successful incumbents have weaker incentives to innovate, so market forces alone may under-invest in radical R&D.
- Policy implications: Society may need state support for R&D, active competition policy, and social safety nets to manage job disruption from innovation.
Content summary
The article reports that the 2025 Sveriges Riksbank Prize in Economic Sciences recognises work demonstrating how scientific knowledge and competition interact to produce sustained economic growth. Mokyr traced the historical shift that made growth possible by emphasising scientific, reproducible improvement — rather than isolated inventions — as central to the Industrial Revolution and beyond. Aghion and Howitt formalised how competition and the replacement of firms (creative destruction) provide incentives to invest in innovation, while also generating social costs when firms fail and jobs are lost.
The research suggests that merely increasing R&D spending is insufficient: institutions that allow inefficient firms to be displaced and that support new entrants are crucial. The laureates and commentators warn that policies should balance encouraging radical innovation with protections and retraining for affected workers — a lesson seen as relevant today given concerns about automation and AI replacing labour.
Context and relevance
This prize highlights longstanding debates in economic policy: how best to stimulate innovation, when to intervene, and how to manage the social consequences of technological churn. For policymakers, researchers and business leaders, the award underlines evidence-based reasons to prioritise science funding, competition policy and targeted R&D support. It also connects historical analysis with formal economic models, providing a clearer rationale for state roles in innovation systems and the need for social safety nets as economies adapt.
Why should I read this?
Because it explains, in a few sharp points, why science funding and competition policy aren’t just geeky extras — they’re the engines of long-run prosperity. If you care about jobs, tech policy, or where growth comes from, this is worth five minutes of your time — the Nobel committee just gave these ideas a very big spotlight.