Three Share Nobel in Economics for Work on How Technology Drives Growth

The Nobel Memorial Prize in Economic Sciences was awarded on Monday to Joel Mokyr of Northwestern University, Philippe Aghion of INSEAD and the London School of Economics and Peter Howitt of Brown University for their work on how innovation drives economic growth.

The three economists shared the prize for research that explains the relationship between technological progress and sustained economic growth that has improved living standards, health and quality of life for people around the world. The prize committee said that their work would help ensure that growth was maintained and could be steered in the direction to support humankind.

For most of human history, there was very little economic growth, John Hassler, the chair of the prize committee, said in a ceremony announcing the award. Despite important discoveries that improved living conditions, growth leveled off. But over the past two centuries, that changed. “Sustained economic growth, driven by a continuous stream of technological innovations and improvements, has replaced stagnation,” Mr. Hassler said.

Mr. Mokyr was awarded half the prize for his work in explaining how sustained growth became the norm.

He showed that for innovations to succeed and become a self-generating process, people needed a scientific explanation for why the breakthroughs worked. Before the industrial revolution, a lack of this knowledge made it difficult to build on new discoveries, the committee said. Mr. Mokyr’s work also emphasized the importance of society being open to new ideas and allowing change, it said.

Mr. Aghion and Mr. Howitt shared the other half of the award for what the committee described as “the theory of sustained growth through creative destruction.” They built a mathematical model for growth, with creative destruction as a core element.

The committee described creative destruction as “an endless process in which new and better products replace the old.” They used the example of the telephone, in which each new version made the previous one obsolete, from the rotary dial phone in the early 1900s through to today’s smartphones.

Mr. Aghion and Mr. Howitt’s work shows how economic growth can continue despite companies being sidelined by the innovation of other firms. Their work can support policymakers in designing research and development policies, the committee said.

The laureates’ work shows that “we should not take progress for granted,” Kerstin Enflo, a member of the Nobel committee, said during a news conference.

“Instead, society must keep an eye on the factors that generate and sustain economic growth,” she added. “These are science-based innovation, creative destruction and a society open for change.”

Mr. Aghion said that the prize came as “a huge surprise.”

“I can’t find the words to express what I feel,” he added by telephone at the news conference. He also warned against forces like protectionism and tariffs that obstruct growth and are currently gaining traction.

Trade barriers and deglobalization make markets more fragmented and reduce opportunities to exchange ideas and transfer technologies, he said.

“Openness is a driver of growth,” Mr. Aghion said, adding that he sees “dark clouds” accumulating.

“I’m not welcoming the protectionist wave in the U.S.,” he said.

He also called on European countries not to let the United States and China become the world’s only technological leaders, and to encourage high-tech innovations of their own.

Considering the threats to economic growth, Mr. Aghion said there needed to be innovation to support green growth, because companies would not “spontaneously” pursue it. At the same time, that artificial intelligence had “fantastic” growth potential, but there needed to be appropriate competition policy so that A.I. innovators would not stifle the entry of others into the market, he said.

“Those are very exciting questions that keep us busy,” he said.

Who won the Nobel Prize in Economics in 2024?

Last year, Daron Acemoglu, Simon Johnson, and James Robinson shared the award for their work on how institutions are formed and contribute to a country’s prosperity.

Who else has won a Nobel Prize this year?

The prize in physiology or medicine went to Mary E. Brunkow, Fred Ramsdell and Shimon Sakaguchi for their discoveries about immune systems.
The award for physics was given to John Clarke, Michel Devoret and John Martinis for their work in quantum mechanics and electric circuits.
The prize for chemistry was shared among Susumu Kitagawa, Richard Robson, and Omar M. Yaghi for the development of metal-organic frameworks, which are constructions that can capture carbon dioxide, for example.
The literature prize went to Laszlo Krasznahorkai, a Hungarian novelist, for his “compelling and visionary oeuvre that, in the midst of apocalyptic terror, reaffirms the power of art.”
The Nobel Peace Prize was awarded to María Corina Machado, an opposition leader in Venezuela, for “her tireless work promoting democratic rights.”