Stockholm [Sweden], October 13 (ANI)- The Royal Swedish Academy of Sciences announced on Monday that it has decided to award the Nobel Prize in Economics 2025 to Joel Mokyr, Philippe Aghion, and Peter Howitt 'for having explained innovation-driven economic growth.'

The 2025 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel goes to the trio, with one half awarded to Mokyr 'for having identified the prerequisites for sustained growth through technological progress' and the other half jointly to Aghion and Howitt 'for the theory of sustained growth through creative destruction.'

In short, they show how new technology can drive sustained growth.

The Prize committee said that over the last two centuries, for the first time in history, the world has seen sustained economic growth. This has lifted vast numbers of people out of poverty and laid the foundation of our prosperity. This year's laureates explain how innovation provides the impetus for further progress.

They further said the laureates studied the mechanisms behind sustained growth.

'The laureates' work shows that economic growth cannot be taken for granted. We must uphold the mechanisms that underly creative destruction, so that we do not fall back into stagnation,' said John Hassler, Chair of the Committee for the Prize in Economic Sciences.

In an article from 1992, they constructed a mathematical model for what is called creative destruction: when a new and better product enters the market, the companies selling the older products lose out. The innovation represents something new and is thus creative. However, it is also destructive, as the company whose technology becomes passe is outcompeted.

Aghion and Howitt's model shows that there are strong forces pulling in different directions as regards investment in research and development (R&D) and thus economic growth. Depending on factors such as the market and period of time, the need to subside R&D may vary.

Technology advances rapidly and affects us all, with new products and production methods replacing old ones in a never-ending cycle. This is the basis for sustained economic growth, which results in a better standard of living, health and quality of life for people around the globe.

However, this was not always the case. Quite the opposite - stagnation was the norm throughout most of human history. Despite important discoveries now and again, which sometimes led to improved living conditions and higher incomes, growth always eventually levelled off, according to the Nobel Prize committee.

Joel Mokyr used historical sources as one means to uncover the causes of sustained growth becoming the new normal. He demonstrated that if innovations are to succeed one another in a self-generating process, we not only need to know that something works, but we also need to have scientific explanations for why. The latter was often lacking prior to the Industrial Revolution, which made it difficult to build upon new discoveries and inventions. He also emphasised the importance of society being open to new ideas and allowing change.

Mokyr, born in 1946 in the Netherlands, has a PhD from Yale University and is a Professor at Northwestern University in the US.

Philippe Aghion and Peter Howitt also studied the mechanisms behind sustained growth. In an article from 1992, they constructed a mathematical model for what is called creative destruction: when a new and better product enters the market, the companies selling the older products lose out.

The Prize money of 11 million Swedish kronor will be split between the winners, with one half to Joel Mokyr and the other half jointly to Philippe Aghion and Peter Howitt.

Philippe Aghion, born 1956 in Paris has a PhD from Harvard University, Cambridge and is a Professor at College de France and INSEAD, Paris and the London School of Economics and Political Science, UK. Peter Howitt, born 1946 in Canada, has a PhD from Northwestern University and is a Professor at Brown University in the US. (ANI)