Philippe Aghion: from transition thinking to a Nobel Prize

Philippe Aghion, the EBRD’s former Deputy Chief Economist and Research Co-ordinator, has long 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.It is, therefore, fitting that the Royal Swedish Academy of Sciences awarded the 2025 Nobel Prize in Economic Sciences to Joel Mokyr, Philippe Aghion and Peter Howitt.

It is no exaggeration to say that Philippe Aghion’s thinking is part of the EBRD’s DNA. Long before his Nobel Prize, Philippe helped to shape the Bank’s intellectual foundations. In the early 1990s, he served as the Bank’s Deputy Chief Economist and Research Co-ordinator 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 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. 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 For innovation to flourish, economies need governance frameworks that encourage renewal, allowing outdated technologies and unproductive firms to exit (“creative destruction”), freeing up space and resources for fresh ideas.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 remains at the heart of the EBRD’s mission, of course. 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 boundaries of research as Professor of Economics at the Collège de France, INSEAD and the London School of Economics. He is applying his groundbreaking work to some of the most pressing economic issues of our time, such as the influence of AI on economic growth, the role of the state in pushing for green tech innovation and even the end of economic growth as we know it.