The 2025 Nobel Prize in Economics, awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt, underscores the critical role of innovation in driving long-term growth — a timely message for India as it aims for a $5-trillion economy. Their research, centered on endogenous innovation and “creative destruction,” offers policy insights for developing economies struggling to scale science, technology, and institutional support.
Table of Contents
Why India should pay attention?
The Nobel Committee’s selection signals that innovation ecosystems, not just capital or labor, are central to economic performance. In India, where public R&D remains below 0.7% of GDP and innovation remains concentrated in few sectors and states, the laureates’ models show how persistent institutional reform can yield high returns.
“Countries that fail to renew their innovation engines fall behind — regardless of size,” said a Delhi-based World Bank economist.
Core Insights From The Nobel Work
Innovation must be built in
Mokyr’s historical analysis of the Industrial Revolution shows innovation thrives only where science, openness, and education converge. Aghion and Howitt’s model mathematically proves how growth depends on new firms displacing old ones — a challenge in India’s highly concentrated markets.
Institutions, not just infrastructure
India’s growing digital stack and production-linked incentives are steps forward, but the research argues that institutions enabling experimentation, competition, and knowledge sharing are what sustain growth over decades.
Relevance to Indian Policy
- The findings directly apply to NITI Aayog’s innovation agenda and India’s Science, Technology & Innovation Policy (STIP).
- They support calls for boosting funding to CSIR, DRDO, and university research centers.
- They challenge India Inc to invest more aggressively in private R&D, which lags global peers.
“This Nobel reinforces the need for India to move from ‘jugaad’ to sustained, deep innovation,” said Dr. Kiran Mazumdar-Shaw, Biocon founder.
What’s Next?
- India’s Economic Advisory Council is expected to brief ministries on policy implications.
- Discussions on raising R&D-to-GDP ratio in the upcoming Union Budget may gain fresh momentum.
- Educational institutions may integrate Mokyr-Aghion-Howitt frameworks into economics curricula.
By The Numbers — India Focus
| Metric | India Value | OECD Avg |
|---|---|---|
| R&D as % of GDP | 0.64% (2023) | 2.67% |
| India’s Global Innovation Index Rank | 40th (2024) | — |
| Share of R&D by Private Sector | 36% | ~70% (in advanced economies) |
Take Away from Nobel Prize 2025
As India eyes high-growth targets and global competitiveness, the 2025 Economics Nobel offers both a warning and a way forward: reform systems to let ideas, not just industries, lead.