{"id":56782,"date":"2025-10-14T21:17:12","date_gmt":"2025-10-14T15:47:12","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=56782"},"modified":"2025-10-15T12:54:24","modified_gmt":"2025-10-15T07:24:24","slug":"nobel-prize-economics-2025","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/14-10-2025\/nobel-prize-economics-2025","title":{"rendered":"Nobel Prize in Economics 2025"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/ Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The 2025 Economics Nobel prize was awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt for their groundbreaking work on innovation and economic growth.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Historical Roots of Modern Economic Growth<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The research explored why sustained economic growth emerged only in the last two centuries despite technological progress throughout history.<\/li>\n\n\n\n<li>It argued that before the Industrial Revolution, technological knowledge was largely <strong>\u201cprescriptive\u201d<\/strong> i.e. people knew how to make things work but not why they worked.<\/li>\n\n\n\n<li>The Scientific Revolution during the 16th\u201317th centuries transformed this into <strong>\u201cpropositional\u201d<\/strong> knowledge i.e. linking empirical understanding with scientific reasoning.<\/li>\n\n\n\n<li>This fusion of science and technology created the foundation for <strong>\u201cuseful knowledge,\u201d<\/strong> enabling systematic innovation.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Economics of Creative Destruction<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Their <strong>1992<\/strong> model mathematically formalised how creative destruction, where new technologies replace old ones, drives long-term macroeconomic growth.<\/li>\n\n\n\n<li><strong>In this framework:<\/strong>\n<ul class=\"wp-block-list\">\n<li>Firms invest in R&amp;D to create superior products or processes.<\/li>\n\n\n\n<li>Successful innovators earn temporary monopoly profits.<\/li>\n\n\n\n<li>Over time, they are replaced by new innovators \u2014 a cycle of creative destruction.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>This process explains <strong>how aggregate GDP grows steadily<\/strong>, even as individual firms rise and fall.<\/li>\n\n\n\n<li>Their general-equilibrium model links all markets (goods, labor, and capital), showing how micro-level innovations translate into macroeconomic stability.<\/li>\n\n\n\n<li>They also demonstrated that R&amp;D has positive social spillovers, justifying public investment in research and education.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Significance for India and other developing economies<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Invest in Science and Human Capital: <\/strong>Expand R&amp;D funding, foster innovation hubs, and improve technology transfer between research institutions and industries.<\/li>\n\n\n\n<li><strong>Balance Adoption and Innovation:<\/strong> While India can benefit from technology imports and FDI, long-term growth demands indigenous innovation capacity supported by start-up ecosystems and simplified regulations.<\/li>\n\n\n\n<li><strong>Strengthen Competition:<\/strong> Prevent excessive market dominance in sectors like telecom and technology to maintain a level playing field for new entrants.<\/li>\n\n\n\n<li><strong>Resilient Labor Market Policies:<\/strong> Embrace \u201cflexicurity\u201di.e.\u00a0 protect workers through training and social insurance rather than rigid job protection.<\/li>\n\n\n\n<li><strong>Promote Inclusive Innovation:<\/strong> Align technology policy with national priorities like renewable energy, digital inclusion, and sustainable manufacturing.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#fff2cc\"><tbody><tr><td><strong>Nobel Economics Prize\u00a0<\/strong><br>&#8211; The award is officially known as the <strong>Bank of Sweden Prize in Economic Sciences<\/strong> in Memory of Alfred Nobel.\u00a0<br>&#8211; This prize was established in<strong> 1968<\/strong> by the central bank of Sweden as a memorial to Alfred Nobel.<br>1. He is a <strong>19th-century<\/strong> Swedish businessman and chemist, is known for inventing dynamite and establishing the five original Nobel Prizes.<br>&#8211; The first winners of the economics prize, in <strong>1969<\/strong>, were <strong>Ragnar Frisch and Jan Tinbergen.<\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-economics\/nobel-prize-economic-sciences-winners-10304713\/\" target=\"_blank\" rel=\"noopener\"><strong>IE<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong>Context<\/strong><\/p>\n<li class=\"ms-5\">The 2025 Economics Nobel prize was awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt for their groundbreaking work on innovation and economic growth.<\/li>\n<p><\/p>\n<p><strong>Historical Roots of Modern Economic Growth<\/strong><\/p>\n<li class=\"ms-5\">The research explored why sustained economic growth emerged only in the last two centuries despite technological progress throughout history.<\/li>\n<li class=\"ms-5\">It argued that before the Industrial Revolution, technological knowledge was largely \u201cprescriptive\u201d i.e. people knew how to make things work but not why they worked.<\/li>\n<li class=\"ms-5\">The Scientific Revolution during the 16th\u201317th centuries transformed this into \u201cpropositional\u201d knowledge i.e. linking empirical understanding with scientific reasoning.<\/li>\n<li class=\"ms-5\">This fusion of science and technology created the foundation for \u201cuseful knowledge,\u201d enabling systematic innovation.<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/14-10-2025\/nobel-prize-economics-2025\" class=\"btn btn-primary btn-sm float-end\">Read\u00a0More<\/a><\/p>\n","protected":false},"author":15,"featured_media":56793,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-56782","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/10\/nobel-prize-economics-2025.png","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/56782","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=56782"}],"version-history":[{"count":2,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/56782\/revisions"}],"predecessor-version":[{"id":56806,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/56782\/revisions\/56806"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media\/56793"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=56782"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=56782"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=56782"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}