Professor Philippe Aghion has been one of the most influential scholars in economics worldwide during the last two decades. His research has advanced our understanding of the relationship between, on the one hand, firm-level innovation, entry and exit and, on the other hand, productivity and growth. Hence, he has theoretically aligned macro-level outcomes with a more complete and consistent micro-economic setting. He is one of the founding fathers of the pioneering contribution referred to as Schumpeterian growth theory. Although he is most renowned for his theoretical contributions, Professor Aghion has also undertaken highly influential empirical research in which the implications of his theories are tested on real-world data.
More specifically, Aghion’s work highlights i) how higher rates of entry and exit among firms (so-called creative destruction processes) and increased competition can be associated with a higher rate of innovation-driven growth; ii) the relationship between growth and long-term technological waves, in which such waves seem to be associated with an increase in the flows of entry and exit among firms; iii) how growth is affected differently depending on whether entry occurs close to the technology frontier or below it; iv) the relationship between growth and firm dynamics, i.e., how young and small firms exit more frequently than large firms but also (conditional on survival) grow faster; v) how incomplete contracts and bankruptcy procedures affect entrepreneurial finance; and vi) how institutions influence entrepreneurial activity.
Professor Philippe Aghion has not only contributed sophisticated theoretical models in regard to the impact of entrepreneurial and innovative activities on growth but also vitalized the discussion on its policy implications.
You can listen to a podcast with Philippe Agion here.
See a short summary from the 2016 Award Ceremony.