Nobel Prize in Economics for 2025 highlighted how deeply economic growth depends on innovation. The award went to Joel Mokyr “for having identified the prerequisites for sustained growth through technological progress”, Philippe Aghion and Peter Howitt for explaining how new ideas and technologies shape long-term prosperity and why the process can be slowed down.
Economic historian Joel Mokyr explored why progress remained slow for centuries and why now innovation suddenly took off.
He noted that one of the key turning points was when fundamental science began to explain why inventions work, not just how to make them. The shift created a powerful feedback loop between science and technology, leading each to strengthen and inspire the other.
Mokyr also pointed out that innovation needs more than scientific knowledge, the other essential component is a culture that welcomes change.
Even the best technologies fail to be developed or widely adopted when societies or companies resist them, whether to protect influence, maintain a competitive edge, or follow political or religious agendas.
Economists Philippe Aghion and Peter Howitt have added the uncomfortable half of the story and built a mathematical economic model, showing how innovative activity fits into the broader economy.
A key part of their exploration is that new technologies do not appear out of nowhere, They emerge through continuous investment in R&D initially leading to competitive advantage and then to what they call creative destruction, where new products and technologies as well as their creators replace the older ones.
Aghion and Howitt also studied how rules, institutions, and incentives shape innovation. For example, strong intellectual property rights help inventors benefit from their work, but too much protection can slow down the spread of new technologies, which makes finding the right balance crucial.
The work of Nobel Prize researchers reminds us that innovation inevitably creates both winners and losers and as soon as companies or workers fall behind, they often resist change. Therefore, successful economies create systems, legislation and other initiatives that help people and organizations adapt to transitions and move forward instead of resisting and blocking progress.
Together, the laureates showed that innovation is not a miracle, but rather it is a process that depends on strong institutions, fair competition, and a culture that embraces learning and change. Whereas we at Catapult help companies explore new technologies, see the bigger picture, and act with confidence instead of resistance.
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