The 2025 Nobel Prize in Economic Sciences was awarded to Joel Mokyr, Philippe Aghion and Peter Howitt for explaining innovation-driven economic growth. Their research shows why the world, for the first time in history, has experienced continuous progress over the past two centuries.

“Understanding the forces behind sustained growth is extremely interesting and important,” says Anna Dreber Almenberg, Professor of Economics at the Stockholm School of Economics and a member of this year’s Nobel Prize Committee. “There have been many periods of innovation before, but they didn’t lead to ongoing growth. The laureates have figured out what made this possible.”

The prize was divided, with Joel Mokyr receiving one half and Philippe Aghion and Peter Howitt sharing the other, each contributing a different perspective on how innovation drives long-term growth. Mokyr explored how the Industrial Revolution emerged in Britain, emphasizing the interaction between science and technology and openness to ideas. Aghion and Howitt developed a mathematical theory of sustained growth based on creative destruction, showing how new technologies replace old ones.

“Creative destruction – where new innovations outcompete older ones – leads to conflict between those that are currently on top of the innovation ladder and risk being pushed down and those that are on their way up,” Dreber Almenberg explains. “Mokyr showed how British society was ready to handle such tensions in constructive ways.”

The evolution of economic thought

Dreber Almenberg sees the laureates’ work as reshaping how economists think about the link between science and technology and innovations. “Before the Industrial Revolution, people often knew that something worked, but not why,” she explains. “The Enlightenment and the scientific revolution changed that. When science and technology started to interact with skilled practitioners, we got innovation-driven growth – progress built on understanding.”

She adds that the same principle applies today. “We can’t take growth for granted. We need openness to new ideas and people who can turn new knowledge into practice.”

Growth and sustainability

The laureates’ insights also speak to today’s challenges. “Sustained and sustainable are not necessarily the same,” Dreber Almenberg says. She notes that some of Philippe Aghion’s recent work focuses on green growth. “He studies how innovation can stay an engine for development while reducing environmental impact,” she says. “Aghion and Howitt describe an innovation ladder where new ideas build on older ones. If that ladder depends on fossil fuels, we risk getting stuck dependent on fossil fuels. Policy can help shift innovation toward greener energy.”

Preparing for change

Dreber Almenberg believes artificial intelligence could play a major role in shaping the next phase of innovation. “AI can increase the amount of useful knowledge and help synthesize it,” she says. “It could lead to more sustained growth if it’s used to expand our scientific understanding and leads to new inventions.”

At the same time, she notes, technological change always disrupts. “Some people benefit from innovations while others are negatively affected or simply lose out,” she says. “We should compensate those who lose out, for example through insurance or support for workers affected by creative destruction.”

The laureates have also warned that excessive market concentration can hold back progress. “If only a few firms dominate, innovation can slow down. Sustained growth depends on competition as well as creativity.”

Looking ahead

For Dreber Almenberg, the work of Mokyr, Aghion and Howitt is a reminder that economic growth cannot be taken for granted. “The last two hundred years have been exceptional,” she says. “Sustained growth relies on curiosity, openness and a willingness to adapt. If we stop encouraging new ideas or fail to manage change fairly, we risk losing the very forces that made progress possible in the first place.”