We’re told, almost daily, that we’re living in the midst of a technological revolution driven by AI (artificial intelligence) and robotics.
Why then, in the age of such rapid innovation, are output, productivity and real wages in advanced economies stagnating and why is income inequality on the rise again?
The conditions that give rise to sustained bursts of economic growth and prosperity are not as apparent as you might think.
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This year’s Nobel Prize in Economics was awarded to three economists whose work examines the role of innovation in driving economic growth.
Joel Mokyr, Philippe Aghion and Peter Howitt won the 2025 Nobel prize for their work on how the forces of “creative destruction” can drive economic growth, said the Royal Swedish Academy of Sciences on Monday.
The prestigious award, formally known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, is the final prize to be given out this year.
The prize winners’ work explains how technology gives rise to new products and production methods that replace old ones, resulting in a better standard of living, health and quality of life for people around the globe, said the academy.
The laureates have also shown that such progress cannot be taken for granted. “Economic stagnation, not growth, has been the norm for most of human history. Their work shows that we must be aware of, and counteract, threats to continued growth,” it said.
[ Nobel Prize in Economics 2025: The winners Opens in new window ]
Mokyr, an academic from Northwestern University in the US, has written extensively about how a supportive intellectual culture in Europe, aided by the continent’s fragmented political landscape which encouraged the free movement of people and ideas, underpinned the original industrial revolution.
In particular, he champions the idea of cultural pluralism, which, he says, allows new ideas to challenge old ones, hence the “creative destruction” theme.
It not obvious that this chimes with Trump’s protectionist trade stance or his clampdown on US universities.
Fellow winner Philippe Aghion insisted “openness” was the key driver of growth and that “dark clouds gather wherever barriers to trade and openness” arise.
“I do not welcome the wave of US protectionism,” he said.
