"Three researchers who probed the process of business innovation won the Nobel memorial prize in economics Monday for explaining how new products and inventions promote economic growth and human welfare, even as they leave older companies in the dust. Their work was credited with helping economists better understand how ideas and technology succeed by disrupting established ways - a process as old as steam locomotives replacing horse-drawn wagons and as contemporary as e-commerce shuttering shopping malls."
"The winners were credited with better explaining and quantifying "creative destruction," a key concept in economics that refers to the process in which beneficial new innovations replace - and thus destroy - older technologies and businesses. The concept is usually associated with economist Joseph Schumpeter, who outlined it in his 1942 book "Capitalism, Socialism and Democracy." Schumpeter called the concept "the essential fact about capitalism.""
"The Nobel committee said Mokyr "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." Aghion and Howitt studied the mechanisms behind sustained growth, including in a 1992 article that offered a complex mathematical model for creative destruction that added new aspects not included in earlier models."
Joel Mokyr, Philippe Aghion, and Peter Howitt explained how new products and inventions drive economic growth and improve human welfare while displacing older firms. Their work clarified the process of creative destruction, showing how beneficial innovations replace and destroy outdated technologies and businesses. Mokyr emphasized the need for scientific explanations for why innovations succeed in a self-generating sequence. Aghion and Howitt developed mathematical models of sustained growth and creative destruction, adding mechanisms absent from earlier frameworks. Real-world examples include e-commerce, streaming services, and internet advertising reshaping retail, media, and advertising markets. The innovation process is central to long-term growth and welfare.
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