Spinning Jennies and Silicon: The Economics of Innovating or Evaporating – Creative Destruction and Public Policies

Balazs Egert

No 12572, CESifo Working Paper Series from CESifo

Abstract: This paper reviews the contributions of the 2025 Nobel Prize in Economics laureates, Joel Mokyr, Philippe Aghion and Peter Howitt, to our understanding of innovation-driven economic growth, situating their work within the broader evolution of modern growth theory and empirical evidence. It highlights why the Industrial Revolution marked a transition to sustained, self-reinforcing technological progress and shows how Mokyr's emphasis on knowledge, culture and institutions complements Aghion and Howitt's Schumpeterian framework, which formalises innovation as a competitive process of firm entry, exit and technological replacement. The paper then uses these frameworks to interpret the widespread productivity slowdown observed in advanced OECD economies since the mid-2000s, arguing that weakened creative destruction, slower diffusion of frontier technologies, declining business dynamism and policy headwinds are key explanatory factors.

Keywords: innovation; productivity; economic growth; creative destruction; institutions (search for similar items in EconPapers)
JEL-codes: L16 N10 O30 O40 O43 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-hpe
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