Three leading economists win the Nobel Prize for proving that innovation—not inertia—drives nations from stagnation to sustained growth.
In a world increasingly shaped by the power of ideas, three global economists have been crowned with the 2025 Nobel Memorial Prize in Economic Sciences for pioneering the concept of innovation-driven growth—a model that resonates deeply with Israel’s own transformation into the “Start-Up Nation.”
Half of the 11 million Swedish kronor (≈A$1.8 million) prize went to Joel Mokyr, the Dutch-born economic historian from Northwestern University, whose groundbreaking research revealed how the Industrial Revolution was born from the fusion of science and practical invention. The remaining half was shared by Philippe Aghion of Collège de France and INSEAD, and Peter Howitt of Brown University, whose joint model of endogenous growth explained why economies thrive when creativity is unleashed—and falter when innovation is stifled.
The Royal Swedish Academy of Sciences hailed the trio for showing that progress demands a society open to new ideas, echoing Mokyr’s insight that a civilization of “engineering without mechanics or medicine without microbiology” could never sustain prosperity.
Their findings mirror Israel’s modern-day trajectory—from a desert economy to a global innovation hub—driven by the same open-minded, risk-embracing ethos that powered the 19th-century British Industrial Revolution.
Aghion and Howitt’s theory of creative destruction—where new firms rise as old ones fade—underscores the balance between disruption and renewal, a dynamic visible in Israel’s tech ecosystem, where bold startups continually reinvent the economy.
But even amid celebration, the laureates warned of “dark clouds” ahead: trade wars, tariffs, and anti-competitive monopolies that could smother future innovation. Aghion called for carbon pricing and open markets, warning that protectionism risks choking the same spirit of enterprise their research celebrates.
The Nobel, though the youngest of the prizes, continues to spotlight the world’s economic thinkers shaping policy and prosperity. Yet the story it tells this year—that curiosity, courage, and openness fuel enduring growth—rings truest in nations like Israel, where innovation is not just economics, but survival.
