"A proud moment for Europe," says EU Chief Ursula von der Leyen on Philippe Aghion's Nobel Prize in Economics

Brussels [Belgium], October 14 (ANI): European Commission President Ursula von der Leyen congratulated economist Philippe Aghion on receiving the Nobel Prize in Economics, calling it a proud moment for Europe and a testament to the continent's values of innovation and openness.

In a post on X, von der Leyen wrote, "Congratulations to Philippe Aghion on receiving the Nobel Prize in economics. A proud moment for Europe and a strong reminder that innovation and openness are the foundations of our shared prosperity."

https://x.com/vonderleyen/status/1977716590977171626

She further highlighted Aghion's influential role in shaping key European economic ideas, noting that "Philippe's contributions helped shape Mario Draghi's vision for European competitiveness. And Europe continues to benefit from his insights."

Von der Leyen also mentioned that Aghion had recently engaged with the EU leadership on economic matters. "Last month, we had the pleasure of hosting Philippe at @EU_Commission headquarters to discuss the future of our competitiveness policy," she added.

Her remarks came shortly after 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."

According to the Academy, the 2025 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel will go 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 essence, the committee said, their work demonstrates how new technology can drive sustained growth.

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

They further observed that 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.

Aghion and Howitt's landmark article from 1992 constructed a mathematical model for what is called creative destruction: when a new and better product enters the market, companies selling older products lose out. The innovation is creative, as it brings something new, but also destructive, as it displaces outdated technologies and firms.

Their model shows that powerful forces pull in different directions when it comes to investment in research and development (R&D) and economic growth. Depending on factors such as market conditions and time periods, the need to subsidise R&D may vary.

The committee explained that rapid technological advancement affects everyone, with new products and production methods constantly replacing old ones in a cycle that sustains growth. This process, it said, forms the foundation of rising living standards, better health, and improved quality of life worldwide.

However, the committee added, this was not always the case. For most of human history, stagnation was the norm, and despite periodic breakthroughs, growth would eventually level off.

Joel Mokyr's work focused on uncovering why sustained growth became possible. Using historical sources, he demonstrated that for innovation to be self-sustaining, societies must not only know that something works but also why it works. Prior to the Industrial Revolution, this scientific understanding was often lacking, making it difficult to build upon new discoveries. Mokyr also stressed the importance of societies being open to new ideas and embracing change.

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

Philippe Aghion and Peter Howitt also examined the mechanisms behind sustained growth. Their 1992 model of creative destruction showed how innovation simultaneously drives progress and disrupts existing industries.

The Nobel Prize money of 11 million Swedish kronor will be divided among the three winners, with one half going to Joel Mokyr and the other half jointly to Philippe Aghion and Peter Howitt.

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

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