13/10/2025
The 2025 Nobel Prize in Economic Sciences is awarded o Joel Mokyr, Philippe Aghion and Peter Howitt “for having explained innovation-driven economic growth”.
Joel Mokyr (American–Israeli Economist):
* Highlighted that before the Industrial Revolution, technological innovation was based mainly on prescriptive knowledge — knowing that something worked, but not why.
* Propositional knowledge (e.g., in mathematics and natural philosophy) developed separately, making it hard to build upon existing knowledge.
* The Scientific Revolution of the 16th and 17th centuries introduced precise measurements, controlled experiments, and reproducibility of results.
* This improved the feedback loop between propositional and prescriptive knowledge, enabling the accumulation of useful knowledge for production.
* Emphasized that practical, technical, and commercial knowledge are essential to turn ideas into reality.
* Argued that Britain’s sustained growth was due to its many skilled artisans and engineers, who could understand designs and transform ideas into commercial products.
Philippe Aghion (French Economist) and Peter Howitt (Canadian Economist):
* Introduced the concept of creative destruction, where new and better products replace older ones, pushing innovation forward.
* When older products lose market share, it incentivizes companies to improve their products or production methods.
* Monopoly profits, even if temporary, encourage companies to invest in research and development (R&D).
* The longer firms expect to stay at the top, the greater their investment in R&D.
* More R&D shortens the average time to innovation, increasing competition and pushing current leaders off the ladder.
* Their mathematical model explains how a balance is achieved between these forces, determining R&D investment, speed of innovation, and economic growth.
* Emphasized that managing these dynamics constructively is crucial for sustained economic growth.
