From research to real impact: How Philippe Aghion’s ideas shape the future of economics and education
The Royal Swedish Academy of Sciences has awarded the 2025 Nobel Prize in Economics to Philippe Aghion, Peter Howitt, and Joel Mokyr for their groundbreaking work on innovation-driven growth and creative destruction.
For ESCP Business School, this recognition resonates deeply: Aghion’s research has inspired generations of economists, including many at ESCP, to rethink how innovation, competition, and human capital drive long-term prosperity — values reflected in the School’s flagship Master in Management (MiM), which trains students to connect theory, policy, and real-world impact.
In an interview with ESCP Professors Cristina Peicuti and Jean-Marc Daniel, Philippe Aghion shared his early insights on artificial intelligence, growth, and the role of public policy, echoing the very questions at the heart of ESCP’s mission: understanding the economy to transform the world.
Key Takeaways
- Philippe Aghion, Peter Howitt, and Joel Mokyr receive the 2025 Nobel Prize for their contributions to the theory of innovation and creative destruction.
- Their work reshaped how economists understand endogenous growth, competition, and technological change.
- Aghion’s dialogue with ESCP Business School reinforces the school’s engagement with debates on AI, sustainable innovation, and inclusive capitalism.
ESCP and the BPCE Chair: A platform for economic dialogue
In 2024, ESCP Business School had the honour of welcoming Professor Philippe Aghion as part of the BPCE Chair “La banque mutualiste et coopérative au service de l’économie”. Invited by Professor Cristina Peicuti, and joined by Professor Jean-Marc Daniel, Aghion took part in an in-depth discussion on “Le pouvoir de la destruction créatrice et l’intelligence artificielle.” During this session, he revisited the Schumpeterian roots of creative destruction, explaining how innovation fuels sustained economic growth while redefining labour, competition, and policy. The exchange reflected ESCP’s commitment to fostering a constructive dialogue between academic research, policy, and practice, highlighting how institutions can channel innovation toward inclusive and sustainable prosperity.
Who won, for what research, and why it matters today
The philippe aghion nobel prize marks a major milestone in modern economic thought. Alongside Peter Howitt and Joel Mokyr, Aghion helped build a coherent theory explaining why economies that encourage innovation and competition grow faster and remain more resilient.
Their collective insights are not abstract models — they define how we navigate today’s global challenges, from AI-driven disruption to the green transition and the future of work.
The 2025 Laureates
Philippe Aghion: Creative destruction and growth policy
Philippe Aghion, Professor at the Collège de France, INSEAD, and the London School of Economics, is one of the world’s most influential economists. His research on creative destruction — the process by which new innovations replace old technologies — provides a framework to understand economic dynamism.
In his ESCP interview, Aghion emphasised that AI should not be feared as a job-destroying force, but seen as part of this same cycle of creation and renewal. When innovation is supported by smart policy, it becomes a driver of productivity and employment, not its enemy.
Peter Howitt: Formalising the Schumpeterian growth engine
Peter Howitt, Professor Emeritus at Brown University, co-developed with Aghion the formal model of Schumpeterian growth — a mathematical structure showing how innovation incentives, competition, and policy interact to sustain long-run growth.
Joel Mokyr: Why technology sustains long-run prosperity
Joel Mokyr, Professor at Northwestern University, brought historical depth to the theory by demonstrating how cultural attitudes toward knowledge and innovation fuel economic progress. His perspective connects technological revolutions, from the Industrial Age to the AI era, revealing how societies that value experimentation sustain prosperity.
Why they won: Innovation, competition, and creative destruction
From Schumpeter to Aghion Howitt: How new ideas replace the old
The laureates built on Joseph Schumpeter’s intuition that capitalism evolves through a constant cycle of innovation. Aghion and Howitt provided the endogenous growth theory that formalized it, showing that innovation incentives arise within the economy itself — not as external shocks.
Endogenous growth: Incentives, R&D and market structure
Their models explain why R&D, education, and fair competition are the key levers of sustainable growth. Aghion’s later work expanded this to include policy design, showing how governments can stimulate innovation while avoiding market concentration.
Policy levers: Competition, entry, and smart industrial strategy
Aghion insists that innovation requires both freedom and regulation: markets open enough for challengers to enter, but structured enough to prevent monopolies from stifling new ideas.
This vision aligns with ESCP’s own approach to economic education — combining entrepreneurial spirit with responsible governance.
Spotlight on Philippe Aghion
Core contributions: Modelling the “innovation rents entry” tension
At the core of Aghion’s theory lies a paradox: the very firms that innovate to gain market power may later resist new entrants. His model of “innovation rents versus entry” formalises this tension, explaining why competition policy must constantly adapt to preserve growth dynamism.
What this means for Europe: Productivity, openness, and regulation
For Europe, Aghion’s message is clear — sustained growth depends on fostering an ecosystem where new ideas can challenge established players.
This thinking directly informs ESCP’s research and its Chairs in Economics and Public Policy, where faculty and students explore how European competitiveness can be renewed through innovation, sustainability, and openness.
In his words: “Comprendre l’économie pour transformer le monde”
As Aghion expressed during his ESCP dialogue: “Understanding the economy is the first step to transforming it.”
This ethos resonates with ESCP’s mission to educate leaders who are both analytical and transformative, capable of bridging economics, technology, and societal progress.
Why It Matters Now
AI and the next productivity wave
Aghion’s optimism about AI challenges the prevailing fear of automation. He argues that AI enhances productivity, expands market opportunities, and ultimately creates new forms of employment. At ESCP, these insights guide ongoing research and teaching in digital transformation and management, notably through programmes such as the Artificial Intelligence for Business Certificate, preparing students and professionals to harness — not fear — technological disruption.
This perspective also connects with ESCP’s research insights featured in The Choice, such as “How artificial intelligence will transform decision-making”, which explores how technology is reshaping managerial reasoning and strategy.
Green innovation: Steering growth toward net-zero
Aghion also warns against short-term fiscal thinking that cuts green investment in the name of austerity. The environmental debt, he argues, is far costlier than public debt. ESCP’s Sustainability Transition and Green Innovation initiatives echo this philosophy, training leaders to design economic models that balance prosperity with planetary responsibility.
Avoiding stagnation: Keeping markets open to challengers
Maintaining openness to new entrants — startups, researchers, and diverse ideas — remains vital to prevent secular stagnation. ESCP’s ecosystem of entrepreneurship labs and innovation hubs embodies this approach, turning theory into practice by encouraging students and partners to challenge the status quo.
Prize Committee & Global Reactions
What the Academy highlighted in 2025
The Royal Swedish Academy of Sciences praised Aghion, Howitt, and Mokyr for “deepening our understanding of how innovation, knowledge, and institutions shape economic growth.” The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel thus celebrates not only technical models but a humanistic vision of progress.
How economists and policymakers are responding
From the OECD to the European Commission, policymakers see Aghion’s framework as a roadmap for reconciling innovation with inclusion — a balance ESCP actively promotes through its research chairs and policy dialogues across its campuses in Paris, Berlin, London, Madrid, Turin, and Warsaw.
ESCP Business School Perspective
Recent ESCP interview with Philippe Aghion
In his conversation with ESCP Professors Cristina Peicuti and Jean-Marc Daniel, Aghion addressed three fundamental questions:
- What does “creative destruction” mean in today’s economy?
- How is AI transforming innovation dynamics?
- What is the role of governments and institutions in shaping fair competition?
His reflections mirror ESCP’s own academic agenda: connecting economic theory to societal transformation. Through its Economics Department, Chairs, and centres of expertise, ESCP contributes to advancing a European model of capitalism rooted in innovation, inclusion, and sustainability.
Backgrounder: The Economics Prize in context
What is the Nobel Prize in economic sciences?
Established in 1969 as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, it honours contributions that deepen our understanding of the economy and its mechanisms of growth.
Timeline: From Frisch & Tinbergen (1969) to Aghion, Howitt & Mokyr (2025)
From pioneers Ragnar Frisch and Jan Tinbergen to the 2025 laureates Philippe Aghion, Peter Howitt, and Joel Mokyr, the prize traces the evolution of economics from pure modelling to a science of innovation, institutions, and human progress.
Related laureates and ideas shaping modern growth theory
Aghion’s work builds on and expands the contributions of previous laureates such as Paul Romer and Robert Solow, reinforcing the bridge between theory, policy, and practice — a bridge that ESCP actively cultivates across disciplines.
FAQ
What is “creative destruction,” in simple terms?
It is the process by which new innovations replace outdated technologies or firms, driving progress and economic renewal. It’s the “engine” of capitalist evolution — a concept central to Philippe Aghion’s Nobel-winning work.
How does competition policy influence innovation?
Strong competition policies encourage firms to innovate rather than block newcomers. This balance — between freedom to grow and rules to prevent dominance — sustains long-term economic vitality.
Who won the Nobel Prize in Economics last year?
In 2024, the Nobel Prize in Economics was awarded to Claudia Goldin for her research on gender differences in the labour market, paving the way for a more inclusive understanding of growth.
Campuses