Famed Western economist Peter Howitt, along with French economist Philippe Aghion, have been named co-recipients of the 2019 BBVA Foundation Frontiers of Knowledge Award in Economics, Finance and Management, the organization announced this week.
The international honour recognizes the pair for their “fundamental contributions to the study of innovation, technical change, and competition policy.”
The citation stated: “(The two economists) have revived, developed in the framework of modern economic theory and validated empirically Schumpeter’s idea that productivity growth at the macroeconomic level stems from a process of creative destruction.”
Popularized by Austrian economist Joseph Schumpeter in the 1940s, the idea of creative destruction holds that productivity growth at the macro level is the result of a process whereby the firms best able to adapt and develop new technologies will drive out competitors that lag behind in productivity. The result is a ceaseless movement with the most productive players displacing their less productive counterparts.
Currently an Honorary Professor of Economics at Western, Howitt, MA’69 (Economics), taught generations of economists from 1972-96, combining his work here with visiting positions at Laval University, University of Paris, University of Toulouse, and the Massachusetts Institute of Technology (MIT).
In 1996, Howitt moved to Ohio State University as a university chaired professor, before joining the faculty at Brown University in 2000. He has held editorial positions with many leading economics journals and been granted several honorary doctorates.
The new BBVA Foundation laureates began collaborating in 1987, not long after Aghion joined the staff at MIT. There, he met Howitt, at the time a visiting professor.
“It was Olivier Blanchard, a Professor of Economics, who introduced us to each other,” Howitt said. “(He) suggested we might want to collaborate, as we had some ideas in common. He was quite right, I think, because we hit it off immediately and began to work on theories of economic growth. And we have been doing so ever since.”
“At the time we would talk in class about Schumpeter’s idea that innovation is important for growth, but we realized that what was lacking was a model,” said Aghion, Chair of the Economics of Institutions, Innovation and Growth at the Collège de France in Paris, and Centennial Professor of Economics at the London School of Economics.
Here, the French researcher’s specialization in applied microeconomic theory found its ideal complement in the macro analysis that was the Canadian’s terrain.
“The work I’ve done with Philippe is the most important of my career,” Howitt said. “We’ve been collaborating for 33 years now, so it’s taken up a very big part of my professional career. Now to share such an important award with him; I just couldn’t be happier.”
In 1992, joint paper, A Model of Growth through Creative Destruction, appeared in Econometrica. The framework established in it “is the basis for important positive and normative new insights, and identifies policies that can increase or decrease innovation and growth,” the citation stated.
The international BBVA Frontiers of Knowledge Awards recognize and encourage world-class research and artistic creation in the form of specific, outstanding advances, acknowledging contributions of lasting impact for their originality and theoretical significance. The awards are given in eight categories.