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Economic growth

Nobel Economics Prize Honours Economic Creation and Destruction

Strategic Insights

— 1 min read

Economic growth has lifted billions of people out of poverty over the past two centuries, but the trio of economists Joel Mokyr, Philippe Aghion, and Peter Howitt warn that poor policy could see economies stagnate again. Innovation is key to driving sustainable growth, and the three economists have extensively researched this concept, highlighting the importance of society being open to new ideas. Their work has also examined the creation and destruction of firms in the economy, with Aghion and Howitt's 1992 article building on earlier work on "endogenous growth" and "creative destruction".

Key Takeaways:

  • Joel Mokyr's work has shown that sustained economic growth would not emerge in a world without scientific understanding, citing examples like engineering, metallurgy, and microbiology.
  • Mokyr emphasized the importance of society being open to new ideas, as seen in the UK's adoption of scientific understanding, which led to the Industrial Revolution.
  • Aghion and Howitt's model implies that governments need to be careful with subsidies, as companies may not invest in innovation if they think their advantage will be overtaken.
  • Their work supports the idea of retraining workers who lose their jobs in firms displaced by more innovative competitors, which can build political support for policies that encourage economic growth.
  • The three laureates have expressed concerns about the impact of endless growth on the planet and the need for economic growth to be consistent with reducing greenhouse gas emissions.
  • The economics prize continues to be dominated by researchers working at US universities and has been criticized for its lack of representation of women, with only three of the 99 economics laureates being female.

Statistics:

  • 11 million Swedish kronor (about A$1.8 million) is the prize money for the Nobel Memorial Prize in Economic Sciences.
  • 10% of firms in the US enter and 10% leave the market each year.
  • 99 men have received the Nobel economics prize, with only three women being recognized.
  • 1969 is the year the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was first awarded.

Sources:

  • The Conversation (Au and NZ)
  • The 2025 Nobel economics prize honours economic creation and destruction (https://theconversation.com/the-2025-nobel-economics-prize-honours-economic-creation-and-destruction-267212)

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