Philippe Aghion | From transition thinking to a Nobel Prize

Philippe Aghion — EBRD’s former Deputy Chief Economist and Research Co-ordinator — has been recognised for his groundbreaking work on innovation-driven growth. His ideas on creative destruction, economic governance, and institutional transition remain central to our mission.

Earlier today, the Royal Swedish Academy of Sciences awarded the 2025 Nobel Prize in Economic Sciences to Joel Mokyr, Philippe Aghion, and Peter Howitt.

It’s no exaggeration to say that Philippe Aghion’s thinking is part of EBRD’s DNA. Long before his Nobel, Philippe helped shape the Bank’s intellectual foundations. In the early '90s, he served as EBRD Deputy Chief Economist and Research Co-ordinator here in London — just as the Bank was defining its approach to the transition from centrally planned to market economies.

A key insight from Philippe's research is that economic growth comes in stages. In the early years of transition, progress is driven mainly by reallocating labour and capital and by catching up — adopting and imitating existing technologies from more advanced economies. This “catch-up growth” can deliver rapid gains, but only up to a point. Eventually, countries approach the technological frontier, and imitation alone no longer suffices.

To keep advancing, countries must begin to push that frontier themselves — by fostering innovation, not just adoption. And that requires a very different model of economic governance. For innovation to flourish, economies need governance frameworks that encourage renewal — allowing outdated technologies and unproductive firms to exit ("creative destruction"), freeing space and resources for fresh ideas. Strong institutions, access to finance, competitive markets, and investment in education and research are all key ingredients. Without these, countries risk falling into a middle-income trap, where growth slows once the easy gains from transition have been exhausted.

This way of thinking of course remains at the heart of EBRD’s mission. From supporting good governance and competitive markets to improving access to finance, the Bank continues to apply the ideas Philippe helped embed here more than 30 years ago...

Meanwhile, Philippe continues to push the research frontier as a Professor of Economics at the College de France, INSEAD, as well as the London School of Economics. He is applying his groundbreaking theoretical work to the pressing economic issues of our time, such as the role of AI in economic growth, the role of the state in pushing for green tech innovation, and even the end of economic growth as we know it.