Decoding the 2025 Nobel in Economics: How new ideas crush the old and fuel growth

In Focus by The Hindu · Oct 20, 2025 · 44m

In a paper in 1992, Philippe Aghion and Peter Howitt explained how economic growth is propelled by a cycle of innovation, in which outdated technologies and firms are replaced by newer technology. This cycle of “creative destruction” leads to sustained economic growth, as new technologies and firms outcompete and replace the old, driving productivity and efficiency.

Joel Mokyr’s historical analysis shows that technological progress is not merely a result of scientific discovery, but also depends on the cultural and institutional contexts that support the dissemination and application of…