Blitz Bureau
NEW DELHI: Joel Mokyr, Philippe Aghion and Peter Howitt won the 2025 Nobel economics prize last week for their work on how innovation and the forces of “creative destruction” can drive economic growth and lift living standards across the globe.
Mokyr, a professor at Northwestern University in the United States, was awarded half the prize. Aghion, a professor at the College de France and Insead in Paris and at the London School of Economics and Political Science, and Howitt, a professor at Brown University in the United States, shared the other half of the prize.
Their research explains how technology gives rise to new products and production methods which replace old ones, resulting in a better standard of living, health and quality of life.
The Royal Swedish Academy of Sciences, which awards the prize, said the laureates had 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,” the Academy said.
The prize winners themselves highlighted challenges from US President Donald Trump’s trade policies and his administration’s higher education reforms which are considered by some as an attack on academic freedom.
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 and is worth 11 million Swedish crowns ($1.2 million).
Mokyr warns of self goal by US
While most economists view economic growth as a driver of prosperity, there are some who do not see it as an unalloyed good.
Mokyr’s research looks at “why we are so much richer and live so much better than our great-great-grandfathers”, he said, adding he was worried that the US may lose its place at the vanguard of scientific research and education under President Trump.
“The current administration’s assault on higher education and scientific research may be the biggest own-goal in history, or at least the biggest self-goal since the Ming Dynasty in China essentially prohibited scientific research and exploration,” he told Reuters.
“It is self-destructive and is completely driven by irrelevant politics.”
The Trump administration says the US is the largest funder of scientific research in the world and that its measures will cut waste and promote innovation.
Aghion says tariffs stop growth
The award comes at a potential inflexion point for the global economy with many expecting artificial intelligence to spark a new growth spurt.
It also highlights the strategic risks for Europe of falling further behind the United States and China in the technologies of the future.
Aghion said de-globalisation and tariff barriers were “obstacles to growth” adding that the bigger the market the more possibilities to exchange ideas, transfer technologies and for healthy competition.
“Anything that gets in the way of openness is an obstacle to growth. So I see there kind of dark clouds currently accumulating, pushing for barriers to trade and openness,” he said.
Aghion called on Europe to learn from the US and China, which he said have found ways to reconcile competition and industrial policy.
“In Europe, in the name of competition policy, we became very anti any form of industrial policy. I think we need to evolve on that and find ways to reconcile industrial policy in areas like defence, climate, AI, biotech,” he said.
Howitt questions manufacturing fix
Howitt, who said he had been “absolutely stunned” by the award, was also critical of President Trump’s trade policies.
“It’s pretty clear that these are going to discourage innovation by reducing what we call the scale effect,” he told Reuters. “Starting a tariff war just reduces the size of the market for everybody.”
He said that trying to bring manufacturing jobs back to the US could perhaps make some political sense but was not good economic policy.
“We’re good at designing running shoes, but it’s best for us to leave others to make them,” he said.