2025 NOBEL PRIZE IN ECONOMICS FOR Mokyr, Aghion and Howitt.

 Since 1969 Nobel Prize inEconomic Sciences has honoured many distinguished economists( Ragnar  Frisch,Tinbergen ,P A Samuelson, Paul Krugmen ,AK.Sen, Joseph E Stiglitz, Abhljit Sen,Ben Bernanke etc) who tranformed  our understanding of economies,markets and human behaviour- exploring poverty alleviation,financial crises,behavioural economics or climate change etc  where these laureates have made a significant difference.Over the years the Prize has recognized the visionaries who turned abstract economic theories into real world applications from evolving tools to measure national growth and designing innovative mechanisms for market effficicency etc.The 2025 Nobel Prize in Economic Sciences was awarded to Joel Mokyr ,Philippe Aghion,and Peter Howitt for their work analyzing innovation- driven Economic growth. In this context they have attempted to answer fundamental questions like-Why do some economies keep growing for a long time while others stagnate?How do new inventions, new firms and novel method of doing things push economies forward?What  forces resist innovation (and thus slow growth) and how can societies encourage the "right kind" of innovation. The Nobel Prize money is to be shared  by half to Joel Mokyer, Professor,North Western University, Evanston USA,and one fourth each to Philippe Aghion  Professor College de France and INSEAD in Paris and London School of Economics UK & Peter Howitt Professor at Brown University, USA.

JOEL MOKYR 

According to Nobel committee member John Hassler,Nobel Laureate Joel Mokyr utilised historical observations to identify the  factors necessary for sustained growth based on technological innovations.He made a distinction between ' propositional knowledge and prescriptive knowledge ' While the former is general theoretical knowledge the latter is knowledge of techniques and  industrial revolution occurred  when both types of knowledge were build upon each other. He studied how over centuries societies developed "ingredients "required for continual technological  advance.According to Mokyr in  the past innovations were to isolated to sustain growth  and you need a system in which new ideas build on earlier ideas.Innovation can become a continuous engine of growth when people not only have the idea ,but they also understand why it works and allow others to adopt,tweak and combine.According to him once scientific reasoning and engineering became widespread innovations could spawn more innovations. During 18th and 19th centuries in Europe, scientific  societies, patents  ,printing, universities and more open exchange of ideas helped innovations keep multiplying. It follows that several things must be present for innovations to  become  a continuous engine of growth. Hence societies must allow experimentation, tolerate disruption and permit failure. Further in modern times having good education,good laboratories, open communication responsible  IP laws and  tolerant legal and social systems support innovations  not to get stuck but spread and build further. 

PHILIPPE AGHION and  PETER HOWITT 

Both Aghion and Howitt produced a mathematical model of creative destruction, an endless process in which new and better products replace the old ones. The question is how exactly the process of innovation and growth move forward which was already answered by great economist like Joseph Schumpeter in terms of  creative destruction or the continuous process where new ideas ,products, or even firms replace older ones. With innovation there would be a natural process of destruction like  for instance when innovative products automobiles, electronics, engineering etc replace existing one. Once the overall productivity (output per worker,per capital etc.) goes up and  so  the economy grows vibrant. Moreover there is a continuous incentive to innovation and consequently firms continues to invest in R&D to  become more innovative. Aghion's and Howitt's works suggest that growth is not automatic and one need to manage the tension: protecting innovators ( Intellectual property rights and subsidies)avoiding that block free entry ,helping displaced workers and designing policies in R&D,competitive regulations.Further  education, social safety nets etc.Challenges in climate change are equally important. Artificial Intelligence,(AI) robotics and uneven technological adoption, balance between promoting new sustainable technologies while avoiding consolidation and suppression of future innovators are very relevant.

CONCLUSION.

The award of 2025 Nobel prize to Mokyr, Aghion and Howitt assumes greater significance because the future of economic growth models will be driven primarily by innovation which is both  a challenge and opportunity. Role of innovations were highlighted earlier by economists like Joseph Schumpeter and Robert Solow who emphasised importance of technology in getting out of low productivity trap.while technology led growth has became  beneficial  and sustainable to economies of East and Western countries in Africa and Latin America progress has been relatively stagnant.As far as India is concerned due to innovation marked progress have been made in innovative products and processes and in startups that  have leveraged technology to contribute to growth. More over Indian manufacturing witnessed significant breakthrough in recent years from earlier dependence of huge imports to increasingly manufacturing in the local economy utilising support to start-ups and  incentives like production linked insurance schemes etc.