The Cultural and Institutional Preconditions of Endogenous Growth

Prompted by the 2025 Nobel Prize in Economic Sciences awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt, this article asks how sustained innovation-driven growth can be explained by integrating endogenous growth theory with cultural and institutional analysis of knowledge production. It traces the shift from exogenous technological change to the Schumpeterian Aghion–Howitt framework and compares that framework with Mokyr’s concept of a “culture of growth.” Methodologically, it combines comparative analysis of models, reconstruction of mechanisms, and a critical review of historical and empirical research on innovation, competition, human capital, institutions, and technological diffusion.
The analysis shows that the Aghion–Howitt framework explains growth as an endogenous sequence of quality-improving innovations generated by R&D investment. Successful innovators obtain temporary monopoly rents, while each new technology displaces the previous one, producing “creative destruction.” Later extensions link innovation intensity to technological gaps between leaders and followers and explain the inverted-U relationship between competition and innovation: moderate competition may encourage firms to “escape competition,” whereas excessive pressure can reduce expected returns to research for lagging firms. Evidence supports the importance of R&D, firm entry and exit, resource reallocation, human capital, institutional quality, and distance to the technological frontier, but shows that their effects vary across countries, industries, and stages of development.
Mokyr addresses a historical question: why some societies became capable of producing, transmitting, and applying useful knowledge. His approach identifies intellectual openness, competition among ideas and jurisdictions, mobility, research autonomy, and institutions for preserving and disseminating knowledge as conditions that can turn isolated inventions into sustained technological progress. The article argues, however, that Mokyr’s cultural variables are difficult to operationalize and risk generalizing a European historical trajectory. Conversely, formal growth models simplify technological coexistence, the role of the state, international dependence, and the institutional diversity of innovation systems.
The conclusion is that these approaches do not constitute a single theory. Together, they form a multilevel research program linking cultural and institutional preconditions for knowledge creation, microeconomic incentives for innovation, and macroeconomic growth. This synthesis explains why neither market incentives, state coordination, nor cultural openness alone is sufficient to account for long-run technological development.

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