Overview
- The Royal Swedish Academy awarded half the prize to Joel Mokyr and the other half jointly to Philippe Aghion and Peter Howitt for research linking technological progress and firm-level innovation to sustained growth.
- Mokyr’s historical work argues that modern, continuous growth began when scientific explanation fused with technological practice during the Industrial Revolution.
- Aghion and Howitt’s 1992 model formalized growth through creative destruction, with new products and processes displacing incumbents and raising productivity.
- Following the announcement, Aghion cautioned that deglobalization and tariffs dampen innovation incentives, and Howitt criticized U.S. trade policies under President Donald Trump and called for AI regulation due to potential job losses.
- Regional commentary urged higher R&D, stronger institutions and competition policies that enable firm entry, noted Mexico’s informality as a barrier to Schumpeterian dynamics, and highlighted labor measures that pair flexibility with unemployment insurance and retraining.