This year’s Nobel Prize in Economics is unusually pertinent. It honors three scholars who, in different ways, have tried to understand why innovation happens and how it promotes economic growth. These questions have never seemed more pressing.
Technological progress shows no sign of stalling. Quite the opposite: Artificial intelligence promises a new surge of “creative destruction,” meaning higher living standards combined with upheaval in the labor market. Making the most of this prospect is challenging in its own right, but it also exemplifies a deeper puzzle. Over the past few years, advancing knowledge, new goods and services, and new forms of production have arrived alongside sluggish growth in productivity.
Hence the puzzle: Exactly how does technological progress drive prosperity, and why is faster growth not already here? Laureates Joel Mokyr of Northwestern University, Philippe Aghion of the London School of Economics and INSEAD in Paris, and Peter Howitt of Brown University have shed light on these mysteries.
Mokyr is an economic historian who studies episodes of scientific and technological advancement, in particular the knowledge revolution of the late 18th and early 19th centuries. The key point is that discoveries, while essential, are not enough. They have to interact with a supporting cultural and commercial environment that recognizes and applies them. Success requires a compound of scientific knowledge, practical competence and appetite for material progress. History shows that none of those can be taken for granted. The focus of Aghion’s and Hewitt’s work is more squarely on creative destruction, the term coined by Joseph Schumpeter in 1942. The idea acknowledges the downside of innovation: New products dislodge old ones, established firms decline, and new ones take their place, and many workers find their skills no longer in demand.
Crucially, these shifts are part and parcel of economic growth. Rather than errors to be avoided, they are costs to be moderated with judicious public policy, including effective social insurance, better education and training, and attention to economic opportunity. Spur innovation by attending to incentives, supporting research and development, and bolstering competition. That is vital for growth, but be under no illusion: Progress cannot be painless.
Growth through innovation is the only way to keep living standards rising — and rising faster, given the right policies. Growth, and only growth, provides the means to address chronic poverty, vulnerability to disease, climate change and other global threats. Give the prize committee credit for recognizing the centrality of these questions and honoring scholars devoted to finding answers.
The Bloomberg Editorial Board publishes the views of the editors across a range of national and global affairs.
On Sunday, 13 new urgent care centers (UCC) officially began operations across the six special municipalities. The purpose of the centers — which are open from 8am to midnight on Sundays and national holidays — is to reduce congestion in hospital emergency rooms, especially during the nine-day Lunar New Year holiday next year. It remains to be seen how effective these centers would be. For one, it is difficult for people to judge for themselves whether their condition warrants visiting a major hospital or a UCC — long-term public education and health promotions are necessary. Second, many emergency departments acknowledge
Lockheed Martin on Tuesday responded to concerns over delayed shipments of F-16V Block 70 jets, saying it had added extra shifts on its production lines to accelerate progress. The Ministry of National Defense on Monday said that delivery of all 66 F-16V Block 70 jets — originally expected by the end of next year — would be pushed back due to production line relocations and global supply chain disruptions. Minister of National Defense Wellington Koo (顧立雄) said that Taiwan and the US are working to resolve the delays, adding that 50 of the aircraft are in production, with 10 scheduled for flight
Victory in conflict requires mastery of two “balances”: First, the balance of power, and second, the balance of error, or making sure that you do not make the most mistakes, thus helping your enemy’s victory. The Chinese Communist Party (CCP) has made a decisive and potentially fatal error by making an enemy of the Jewish Nation, centered today in the State of Israel but historically one of the great civilizations extending back at least 3,000 years. Mind you, no Israeli leader has ever publicly declared that “China is our enemy,” but on October 28, 2025, self-described Chinese People’s Armed Police (PAP) propaganda
US President Donald Trump’s seemingly throwaway “Taiwan is Taiwan” statement has been appearing in headlines all over the media. Although it appears to have been made in passing, the comment nevertheless reveals something about Trump’s views and his understanding of Taiwan’s situation. In line with the Taiwan Relations Act, the US and Taiwan enjoy unofficial, but close economic, cultural and national defense ties. They lack official diplomatic relations, but maintain a partnership based on shared democratic values and strategic alignment. Excluding China, Taiwan maintains a level of diplomatic relations, official or otherwise, with many nations worldwide. It can be said that
RSS