I. The Nobel Committee's choice breaks the fear of stagnation

in 2025, the Royal Swedish Academy of Sciences gave the world a clear call to action when it awarded the Nobel Prize in Economics to three economists, Joel Mokier, Philippe Agyon, and Peter Howitt. The theme of the prize was "Sustainable Growth through New Technologies." The three scholars were honored for their work on the relationship between technological progress and economic growth.

beyond simply recognizing the completeness of their past research, the award is a clear policy call from the economics community to address the current low-growth fears and the AI revolution. by explaining that sustained economic growth occurs in a cycle in which innovation endlessly replaces the old with new products and methods of production, the Nobel Committee has delivered an urgent message that we must support the mechanisms of creative destruction to avoid returning to the past, where stagnation dominated most of history.

their work goes beyond the limitations of the traditional Solow model, which views economic growth as a contingent factor (exogenous technological progress) imposed from the outside. the New Growth Theory, epitomized by the Agyon-Howitt model, demonstrated that technological progress and idea generation are endogenous- the product of deliberate investment and policy - offering optimism that economic growth is not a game of chance, but can be controlled by clear "policy levers" - R&D investment and talent allocation. sustainable growth comes not from the accumulation of capital, where money is hoarded, but from the proactive act of deploying human resources in research to produce ideas.

II. Creative Destruction: A Mathematical Mechanism for Designing Innovation

1. an Economic Reinterpretation of Schumpeter's Theory

in a 1992 paper published in Econometrica, one of the top journals in economics, Professors Philippe Agyon and Peter Howitt put Joseph Schumpeter's concept of "creative destruction" into a mathematical formulation. The model showed that economic growth occurs in a cycle of innovation, where new technologies or products replace old ones through competition among firms. Without innovation, growth stops and stagnation becomes the norm.

the model emphasizes the importance of the **temporary monopoly profits (innovation rent)** from successful innovation as a driver of growth. innovation occurs only when skilled labor (human capital) is invested in R&D, and if the profits are wiped out by excessive competition soon after a successful innovation, no one will take the risk and invest in R&D. The theory therefore does not advocate pure free competition, but rather "Schumpeterian competition," which requires institutional buffersto ensure temporary monopoly power. the state must dangle the 'carrot' to innovators through intellectual property rights and R&D support to ensure that the engine of growth is sustained.

2. examples of industrial big bangs in the digital age

creative disruption has driven massive industrial transformation alongside technological advances. netflix is a prime example. by investing in a global streaming model and massive in-house content creation, Netflix has reduced traditional cable TV subscriptions and fundamentally changed the way viewers consume entertainment - a disruptive approach that has disrupted cable providers andchallenged traditional broadcast networks.

in the face of this disruption, the U.S. media and telecommunications industry experienced a massive merger and acquisition (M&A) boom, including AT&T's acquisition of DirecTV and Comcast's acquisition of NBCUniversal. incumbents sought to gain economies of scale tocombat Netflix's disruption, demonstrating that innovation has crossed the boundaries of one industry and sparked a "territorial big bang" that has disrupted telecommunications, broadcasting, media, and entertainment as a whole. entrepreneurs and business leaders must respond to this upheaval by challenging the status quo and embracing new business models.

III. Insights from Joel Mokir: The cultural soil in which innovation flourishes

the work of economic historian Joel Mokir shows that innovation is more than just mathematical formulas or capitalization; it is deeply dependent on the institutional and cultural environment. innovation depends on "people" with ideas and technologies, and an open and tolerant institutional environmentin which these people can settle is essential.

historically, the best example of this is the Huguenot Protestants who fled religious persecution by King Louis XIV of France in the late 17th century. france lost an estimated 30,000 skilled watchmakers and engineers, but Prussia, which hosted them, reaped huge economic benefits. In particular, the Huguenot exiles, who made up ⅓ of the population of the underdeveloped inland city of Berlin, were responsible for establishing Germany's entrepreneurial spirit with their pious Puritanism, making the city wealthy.

this example suggests that it's not just taxes and regulations that make a country attract or repel talent, but a cultural environment that respects diversity and intellectual freedom. if a country wants to innovate, it must create a cultural soil where talent can freely research and work without bias.

IV. The AI Age Dilemma: The Vicious Cycle of Growth and Inequality

where the theory of creative destruction is most acutely applied is in the AI revolution. AI can dramatically increase productivity and create a new wave of growth through its labor-substitution effect, but it can also increase economic inequalityif the gains are concentrated in a few innovative companies.

in this context, Professor Agyon's research sends a complex message that the secret ingredient of a market economy lies in "wealth creation" rather than "wealth distribution," but the pain of creative destruction should not be overlooked. rising inequality can trigger public and political resistance to innovation, which in turn can undermine the engine of growth itself.

therefore, national strategies in the AI era must end the pointless debate of "growth or distribution"and focus on a combination of social policies that create wealth through growth, but also mitigate the short-term pain of disruption through education and retraining. Building a virtuous cycle of policies that foster innovation (growth) and social safety nets that absorb the pain of disruption (distribution) is essential for sustainable growth.

V. National Strategic Directions in the Age of Creative Destruction

with the message of the 2025 Nobel Prize in Economics, we must recognize that economic growth is no longer a passive accumulation of capital, but a strategic choice thatrequires active and sometimes painful destruction.

strategic Areaessential course of action Invest in R&D and talent skilled human capital must be deployed in the R&D sector to generate ideas, a key driver of growth. Improving productivity in the research sector should result in higher wages for researchers, ultimately attracting talent to the sector. ensure institutional flexibility the pace of regulation should not be slower than the pace of innovation, which can stifle domestic industry's ability to respond. ensure regulatory flexibility for mergers and acquisitions and industry reorganization to enable domestic companies to compete internationally. foster a culture of openness we need to build an open and tolerant cultural soil for talent to settle in, creating an environment where the creative flow of ideas can flourish. strengthen social safety nets To respond to the changes and inequalities in the labor market caused by AI, we need to proactively strengthen the national retraining and job transition system to increase social acceptance of innovation.

reinvigorating entrepreneurship, cultural openness to innovation, institutional flexibility, and social resolve to share the pain of disruption is the most important policy agenda for sustainable growth in the 21st century.