“Technology is a word that describes something that doesn’t work yet.” - Douglas Adams, author and futurist
The innovation behind growth
The 2025 Nobel Prize in Economic Sciences has spotlighted the power of innovation in driving long-term growth. Joel Mokyr, Philippe Aghion, and Peter Howitt were honoured for their groundbreaking work explaining how new technologies create economic expansion through what they describe as “creative destruction.” Their research underscores how innovation replaces outdated systems to sustain progress.
The science of sustained progress
Mokyr, a historian of technology from Northwestern University, traced how past innovations led to consistent growth since the Industrial Revolution. His work reveals that understanding not just what innovations succeed, but why they do, is vital for ensuring continued prosperity. He demonstrated that innovation is a self-reinforcing cycle that builds on earlier advancements.
Creative destruction as a growth engine
Aghion and Howitt built on Joseph Schumpeter’s theory of “creative destruction,” illustrating how technological breakthroughs disrupt existing markets while opening new ones. This process, though often turbulent, ensures renewal and adaptability. Their model shows that long-term prosperity requires managing this tension between creation and destruction productively.
The AI era and its promise
Today, artificial intelligence embodies this creative tension. AI’s ability to transform industries and productivity surpasses earlier technological shifts. Yet, it also risks disruption if mismanaged. Experts caution that AI’s value will depend on how societies balance innovation’s benefits with its potential to destabilize labour and institutions.
Guarding against stagnation
John Hassler, chair of the Nobel panel, noted that economic growth “cannot be taken for granted.” The challenge now lies in ensuring that AI, like earlier innovations, strengthens rather than stalls human progress. Growth is never automatic; it demands conscious stewardship and adaptation to each wave of change.
Summary
The 2025 Nobel in Economics recognizes how innovation sustains global growth through the mechanism of creative destruction. As artificial intelligence redefines productivity, the balance between progress and disruption becomes crucial. The laureates remind us that managing innovation wisely is the key to enduring prosperity.
Food for thought
Can artificial intelligence fuel progress without triggering a new wave of inequality and instability?
AI concept to learn: Creative Destruction
Creative destruction describes the process by which new technologies or ideas replace outdated ones, driving economic growth through renewal. It captures both the promise of progress and the pain of disruption, making it central to understanding how innovation reshapes societies over time.
[The Billion Hopes Research Team shares the latest AI updates for learning and awareness. This is not a professional, financial, personal or medical advice. Please consult domain experts before making decisions. Feedback welcome!]
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