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Engines of Growth and Inequality in the Wealth of Nations

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  • Oded Galor

Abstract

The Royal Swedish Academy of Sciences awarded the 2025 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to Philippe Aghion, Peter Howitt, and Joel Mokyr "for having explained innovation-driven economic growth". This paper examines their contributions in the context of the development process as a whole. Aghion and Howitt established the centrality of creative destruction in the growth process of advanced economies, identifying the displacement of existing technologies by superseding ones as a key mechanism in sustaining economic growth. Mokyr highlighted the role of a tightening link between theoretical knowledge and practical application during the Scientific Revolution and the Enlightenment in fostering technological progress in Western Europe on the eve of the Industrial Revolution. These frontier-centered perspectives transformed our understanding of the causes and consequences of innovation-driven growth in advanced economies operating near the technological frontier. Yet, throughout much of the development process, the central challenge to growth has depended less on the creation of new technologies than on the emergence of fundamental conditions conducive to skill formation, fertility decline, and societal adaptation, which have shaped the timing of the transition to modern growth, the pace of economic growth thereafter, and the contemporary inequality in the wealth of nations. A comprehensive account of sustained growth and contemporary inequality across societies requires anchoring the growth process in its broader historical arc.

Suggested Citation

  • Oded Galor, 2026. "Engines of Growth and Inequality in the Wealth of Nations," RFBerlin Discussion Paper Series 26173, ROCKWOOL Foundation Berlin (RFBerlin).
    • Handle: RePEc:crm:wpaper:26173
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    References listed on IDEAS

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    1. Oded Galor, 2025. "Unified Growth Theory: Roots of Growth and Inequality in the Wealth of Nations," Annual Review of Economics, Annual Reviews, vol. 17(1), pages 197-216, August.
    2. Oded Galor, 2010. "The 2008 Lawrence R. Klein Lecture-Comparative Economic Development: Insights From Unified Growth Theory," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(1), pages 1-44, February.
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    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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