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

Égert, Balázs (2026) Spinning Jennies and Silicon: The Economics of Innovating or Evaporating – Creative Destruction and Public Policies. FINANCIAL AND ECONOMIC REVIEW, 25 (1). pp. 100-130. ISSN 2415-9271 (print); 2415–928X (online)

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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.

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