They deal with the theme of continuous economic growth. For Professor Mokyr’s part he has used historical sources to explain what has sustained economic growth over the last two hundred years. He emphasizes the importance of societies being open for new ideas and allowing for change when faced with disruptive technical innovations in a more or less steady stream.
Philippe Aghion and Peter Howitt studied more or less the same thing and in 1992 they presented a mathematical model called creative destruction. It explains how new, better products that get introduced to the market will best established companies selling less developed products. The innovation stands for the new and the creative, but at the same time it destroys companies whose products become obsolete.
All three show the power of creative destruction and the importance of handling it in a constructive way. Otherwise development risks being blocked by those companies that are established and rich and risk ruin if they can’t, or do not want to adapt.
“ I was just now giving a lecture on the theme of creative destruction and Professor Aghion’s research, right after hearing about the Prize and I was very happy to hear about it.
Aghion’s and Howitt’s models have led to extensive empirical research examining, among other things, the impact of competition and trade on innovation and growth, as well as microdata studies on individuals seeking to understand how people are motivated to innovate — areas closely related to my own research interests. Mokyr has provided outstanding insights into how institutional factors in the development of knowledge contributed to the emergence of the modern knowledge-driven economy”, says Professor Olof Ejermo at LUSEM.