Create conditions: why work on innovation deserves the Nobel Prize in Economics

The 2025 Nobel Prize in Economics was a response to global challenges — slowing global GDP growth, inequality and technological shifts, experts interviewed by Izvestia believe. The award was given to Joel Mokir, Philippe Agyon and Peter Howitt for explaining economic growth based on innovation. Back in 1992, scientists formulated a model of "creative destruction" - enterprises selling old products suffer losses when updated goods appear on the market. How the Nobel—winning research can be applied in practice and how it is useful for Russia is described in the Izvestia article.

What was the Nobel Prize in Economics in 2025 for?

On October 13, the Royal Swedish Academy of Sciences announced the winners of the Nobel Prize in Economics — Joel Mokir from the University of Evanston (USA), Philippe Agyon from the College de France and INSEAD (France) and Peter Howitt from Brown University (USA). The prize of 11 million Swedish kronor ($1.15 million, or about 93.4 million rubles) will be divided among three scientists — half will go to Mokir, and the rest will go to Agyon and Howitt.

The experts were awarded for their research on how new technologies contribute to long-term economic growth. In particular, Joel Mokir studied historical sources to uncover the reasons for the transition from stagnation to sustainable growth. In his research, he stressed that it is necessary "not only to know that something works, but also to have a scientific explanation of why it is so."

Philippe Agyon and Peter Howitt, in a 1992 joint publication, constructed a mathematical model of "creative destruction." According to the concept, companies that sell outdated products suffer losses when an updated version enters the market.

"The laureates have shown that sustainable growth cannot be taken for granted. Economic stagnation, rather than growth, has been the norm for most of human history. Therefore, we must be aware of and counter threats to continuous growth," the Nobel Committee said in a press release.

Such threats, for example, may come from companies that dominate the market. The restriction of academic freedom has a similar effect. If people do not respond to these threats now, "the machine that ensures sustainable growth and creative destruction may stop working, and people will have to get used to stagnation again," the publication said.

The Commission chose this topic as a response to global challenges — the slowdown in global GDP growth (according to IMF estimates, it will increase by 3% in 2025 against 3.2% in 2024), inequality and structural shifts caused by digitalization and artificial intelligence, said Yaroslav Finam, Director of Strategy, HSE lecturer. Kabakov.

The relevance of the research is related to the technological shift caused by the massive introduction of AI, automation of production and digitalization of the economy. This raises the question for analysts of how to create an institutional environment conducive to innovative development and fair distribution, says Elmira Assiaeva, Associate Professor of the Department of Global Financial Markets and Fintech at Plekhanov Russian University of Economics.

— The global economy is going through a period of structural transformation, when the traditional factors of production — labor and capital — are increasingly giving way to knowledge, technology and human capital. And understanding the mechanisms of this transition is becoming critically important for shaping effective economic policy," the expert believes.

In 2024, the award was given to a study by Daron Ajemoglu, Simon Johnson and James Robinson on the relationship between the development of social institutions in countries and their well-being. In countries that were poor at the time of colonization, inclusive institutions were often introduced (in which the widest possible sectors of society are involved in decision-making and the distribution of benefits). Over time, this led to a general prosperity of the population.

What is the use of research for economics?

The work of this year's award winners shows that sustainable growth does not occur by itself. We need institutions that protect competition and property rights, investments in science and education, and a balance between supporting existing companies and admitting new players, says Fyodor Sidorov, a private investor and founder of the School of Practical Investment.

The authorities receive tools to assess the effectiveness of investments in various spheres of society — the return on investment can last for decades, but they determine the long-term competitiveness of the economy, says Elmira Assiaeva from Plekhanov Russian University of Economics. According to her, the authors show the importance of intellectual property protection to stimulate innovation, but at the same time warn about the risks of excessive monopolization of knowledge, which can slow down its dissemination and use.

However, the development of AI leads to transformation in the global economy and in Russia through several channels, she believes. According to her, among them is a sharp increase in productivity in sectors implementing automation and intelligent systems, the creation of fundamentally new products and services, as well as reducing transaction costs to scale the business.

The national Strategy for the Development of Artificial Intelligence in the Russian Federation until 2030 sets ambitious goals — in particular, to stimulate GDP growth by 11.2 trillion rubles through the introduction of AI technologies and optimization of business models. However, success depends on avoiding the blocking of innovations by bureaucracy and monopolies, Fyodor Sidorov emphasized.

Recently, the Central Bank has intensified discussions with credit institutions about competition in the market. The chairman of the Bank of Russia, Elvira Nabiullina, suggested opening access to new systems for all players two to three years after the launch of the service, if it is critical for the country's infrastructure. Market participants also suggested creating an alternative to Mir maps.

— In the era of AI and technological breakthroughs, sustainable growth is impossible without the creation of flexible institutions that encourage competition and basic science, rather than protecting outdated industries. For our country, this means the need for systemic reforms — reducing administrative barriers, protecting property rights, and investing in retraining citizens. This is important in order to build an economy capable of its own breakthrough innovations, and not just adapting other people's technologies," said Fyodor Sidorov.

According to Andrey Smirnov, an expert on the stock market at BCS World of Investments, for the Russian Federation this means the need not only to replace imports, but also to create its own technology platforms.