It has been awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt “for explaining innovation-driven economic growth”.
- One half of the prize will go to Joel Mokyr “for identifying the prerequisites for sustained growth through technological progress.”
- The other half will be shared jointly by Philippe Aghion and Peter Howitt “for the theory of sustained growth through creative destruction.”
- They observed that, for the first time in history, the past two centuries have witnessed sustained global economic growth.
Their Contribution
- Joel Mokyr
- He described the mechanisms that enable scientific breakthroughs and practical applications to enhance each other and create a self-generating process.
- He identified the factors necessary for sustained growth. It includes
- Continual Flow of Useful Knowledge, consists of propositional knowledge (demonstrates why something works) and prescriptive knowledge (describes what is necessary for something to work).
- Commercial knowledge (transforming ideas into commercial products)
- Societal Openness to Change
- Philippe Aghion and Peter Howitt
- It is called creative because it builds upon innovation, but it is also destructive because older products become obsolete and lose their commercial value.
- They formulated a mathematical model to explain Creative Destruction.
- As per Creative Destruction, the arrival of new and better products in the market causes companies offering older versions to lose their competitiveness or exit the market.
