Philippe Aghion wins the 2025 Nobel Prize in Economics

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

Breaking Barriers: New Research on Africa’s Women Entrepreneurs

ESCP and partners unveil research on the realities, resilience, and growth strategies of women founders in Sub-Saharan Africa

On 6 September, nearly eighty entrepreneurs, investors and ecosystem leaders gathered in Nairobi to reflect on the realities of women-led digital entrepreneurship in Africa. The event — hosted by ESCP Business School, UNCTAD’s eTrade for Women initiative and the Gordon Institute of Business Science (University of Pretoria) — built on a major research project surveying almost one hundred founders and conducting more than thirty in-depth interviews across thirteen Sub-Saharan African countries.

The study confirms a picture many already know: women are driving innovation and trade, but they are slowed by persistent barriers. Six in ten founders reported that family responsibilities limit their business growth. Almost ninety per cent rely on personal savings to finance their companies, with only a small fraction able to access external funding. Digital adoption is widespread but uneven, with high costs, patchy internet and shortages of skilled talent preventing firms from becoming fully digital. And while many women do export, they often do so reactively, through friends or diaspora networks, rather than as part of a planned strategy.

For Alisa Sydow, Associate Professor of Entrepreneurship at ESCP and one of the study’s lead authors, the Nairobi event was not about unveiling new statistics but about recognising the urgency behind them. “The most striking thing is not that the barriers are unknown,” she reflected. “The women live them every day. What they want now is recognition, legitimacy, and systems that match their resilience.”

Prof. Alisa Sydow speaking at the event in Nairobi

Reframing resilience

The discussions in Nairobi also revealed patterns that numbers alone can obscure. Many women are already exporting, but often without a plan. Goods are sent abroad through informal or diaspora channels, sometimes to random markets. Alisa calls this “unplanned exporting”. “Many are trying to expand across borders, but without strategy and support it keeps them in low-growth loops — and in some cases it does more harm than good,” she said.

Turning exporting into a growth strategy requires more than determination. It means reliable market data, trusted digital payment systems, and smoother customs procedures. Without these foundations, ambition risks becoming a burden rather than a springboard.

Portrait of Alisa Sydow — **Alisa Sydow**
Associate Professor of Entrepreneurship at ESCP

Knowledge and community

Identity and visibility matter. Alisa argues that women need spaces where their entrepreneurial work is not hidden behind family roles but recognised as central to economic growth. Community is crucial to this process: the Nairobi event itself became a demonstration of how peer recognition builds confidence.

What began as a panel quickly turned into an open-floor exchange, with audience members driving the discussion. Hours later, groups of founders were still on the terrace sharing strategies and frustrations. For Alisa, that dynamic matters as much as the research. “Community is not only about visibility, it is also a training ground,” Alisa explained. “Through networks, women share experiences, learn from each other, and build the confidence to approach funders or negotiate with policymakers. It is where identity as an entrepreneur is practised.”

A panel discussion featuring leaders across areas of policy and practice

Finance and freedom

Again and again, women in Nairobi returned to the subject of finance. But their call was not for large-scale venture capital. Most asked for modest, fairly priced loans — often around €20–30,000 — to manage cash flow or expand capacity. These sums are sufficient to seize orders, buy equipment, or stabilise operations, yet they remain frustratingly out of reach.

The reasons are structural and cultural. Local banks often prefer to lend to governments, while interest rates of 14 per cent or more make borrowing unsustainable. In some cases, women are still asked whether their husbands consent before they can access credit. “These stories are happening now, in 2025, not in the past,” Alisa underlined.

For her, the message is clear: finance must be designed for the realities of small and growing firms, not just for high-growth ventures. “Women are proven to repay. The system simply isn’t designed with them in mind,” she said. Looking ahead, Alisa hopes future gatherings will go further by putting women in direct dialogue with banks, investors and policymakers — through workshops and networking formats that create not only visibility, but also tangible opportunities to shift practice.

Policy support that makes a difference

Beyond finance, Alisa highlights the power of targeted policy reforms. One example is customs. She points to the absence of a low-value relief scheme in Europe for small parcels from Africa — a mechanism once available in the United States.

“It would cost Europe very little but would make a huge difference for small exporters of fashion and craft goods,” she argued. Such reforms would allow women to ship products with predictable costs, giving them a foothold in international markets.

These practical steps, combined with better digital infrastructure and fairer financial systems, would transform exporting from a risky, ad hoc practice into a deliberate path for growth

Fostering moments of connection and community building

What’s next

The Nairobi event made one thing clear: the time for diagnosis is over. Women entrepreneurs need structures that would enable fairer systems, visible recognition, and opportunities to scale sustainably. “What these women need most is not charity,” Alisa reflected, “but fair systems — and the visibility to claim space as entrepreneurs.”

This research is only the beginning. Follow-up studies are planned, with the aim of deepening understanding and continuing to build visibility for women digital entrepreneurs. For Alisa, the task ahead is ensuring that the evidence gathered translates into practical support: in finance, in policy, and in the everyday systems that shape women’s entrepreneurial lives.

Access the full report on the UNCTAD website

Campuses

Breaking down barriers: new research sheds light on the experiences of African women digital entrepreneurs

Collaborative research from ESCP Business School, Gordon Institute of Business Science and UNCTAD highlights challenges and opportunities for women in the digital economy