We all have heard about the Nobel Prize, a famous award that honors important achievements around the world. While many think of it in science, literature, or peace, the prize in economics also gives ideas that can matter for countries like Nepal.
What is the Nobel Prize in Economics?
The Nobel Prize in Economics, which was first awarded in 1969 is officially called the Sveriges Riksbank Prize in Economic Sciences in the memory of Alfred Nobel. Alfred Nobel was an inventor and a philanthropist who established the original Nobel Prizes in 1895 to honor achievements that benefit humanity. The Nobel Prize in Economics is not technically a Nobel Prize as it was not created by Alfred Nobel himself, the Prize was later added by Sweden’s central bank on its 300th anniversary in 1968, however, it is still provided according to the same principles as the other Nobel Prizes. For being awarded with the prize, a person’s work should show advanced human understanding in economics and have the potential to serve the greatest benefit to humankind.
What is the Nobel Prize in Economics Awarded for?
The Prize is primarily awarded for economic theories which have refined the study and understanding of Economics over time. On the other hand, the prize is also awarded to those who can explain economic theories or processes by linking them with their real-world implications. The works of various Nobel laureates have proven to be of great relevance to Nepali economy as well.
This article explains how recent Nobel Prizes in Economics are relevant to Nepal by using case studies from Nepal and offers an academic policy-oriented suggestion as a key takeaway on what the country can learn from these awards.
What was the prize Awarded for in 2025?
In 2025, the Nobel Prize in Economic Sciences was awarded to three economists for their work on innovation‑driven economic growth. Joel Mokyr received half of the prize for identifying the conditions that enable sustained growth through technological progress, while Philippe Aghion and Peter Howitt shared the other half for developing the theory of growth through creative destruction. The prize winners highlighted how technological progress and creative destruction are important for the steady increase of a country’s economic output over time. Creative destruction is the process where new innovations replace old technologies or businesses, helping the economy grow.
The works of the laureates this year demonstrated that when new ideas are complemented by practical and commercial knowledge, economic growth is achievable. The laureates have argued that besides an increase in GDP, economic growth also involves better living standards, safer cars, better food, the internet and much more. Additionally, they demonstrated the concept of creative destruction; which explains that innovation brings opportunities for some and downfall for others; this process is important for continuous economic growth because it encourages businesses to develop new products, improve existing ones, and adopt better technologies, which drives the economy forward.
How is the work of 2025 prize winners relevant to Nepal?
The following case studies illustrate the relevance of this year’s Nobel laureates’ work to Nepal.
Digital Payments in Rural Businesses:
If we look at the access to internet in Nepal over the past years, the percentage of Nepali population having internet access has grown by seven times from 8% in 2010 to 56% in 2023 and is growing continuously further. This has enabled the local businesses in various rural areas of Nepal to get access to urban and international markets through the use of digital payment platforms, thus increasing their income and living standards along with bringing them into the nation’s revenue stream. This clearly shows that there are factors other than GDP which can demonstrate a nation’s economic growth as explained by this year’s Nobel laureates. Moreover, from this example, we can also demonstrate that the adoption of technology leads to sustained economic growth, because previously, these businesses would be limited to local areas only, however, after the integration of digital payment technologies into their businesses, they are now exposed to a wider business area, as they can sell their products easily to cities as well as in abroad, this has increased their income prospects.
Ride-Sharing in Urban Transport:
Beyond the emphasis on technology-driven economic growth, the laureates have also showed how long-term economic growth happens as new technologies and ideas keep replacing the old ones, driving continuous progress. In Nepal, especially in Kathmandu, the advent of ride-sharing apps has improved the urban transportation options while creating new employment opportunities. The ride-hailing services have replaced the syndicated cab services, providing rides in both cabs as well as motorbikes, in an affordable manner. The theory of creative destruction, proposed by this year’s laureates explains that innovation creates winners and losers, therefore the cab service providers who adapt to using ride-sharing apps would keep getting passengers and thus would keep winning whereas those who abstain from using these apps would be forced to remain side-lined and thus would keep losing. At the same time, the laureates have also argued that new ideas can destroy existing structures and ways of working; therefore are often met with resistance from established interest groups who feel their privileges are threatened. This has been seen, especially in Nepal’s ride-hailing services’ sector, in the form of transport entrepreneurs’ protests against the ride-sharing regulations. Therefore, it is the responsibility of the government to establish an ecosystem where new ideas and enterprises can come to the fore without being blocked by those with privileges.
Besides this year’s Nobel Prize, the works of many past Nobel laureates in Economics are relevant to Nepal. For example, the Nobel Prize in Economics of 2024 was given to three economists, Daron Acemoglu, Simon Johnson and James A. Robinson. The Nobel laureates of that year emphasised on the significance of financially inclusive institutions for stimulating economic activities and empowering citizens. In Nepal, co-operative societies are examples of such institutions as they have helped in financial inclusion of communities in rural areas by expanding access to banking and credit services and thus encouraging entrepreneurship. Similarly, the Nobel laureates of 2019 were awarded for having developed an experimental approach to alleviating global poverty. The laureates had even visited Nepal to train the Nepali bureaucrats about policies and approaches that could be adopted for poverty alleviation.
Key Takeaways for Nepal’s Economic Future
From the above discussion, it is clear that the work of Nobel laureates in Economics can be connected to Nepal’s economy, because their research deals with important economic ideas like innovation, institutions, financial inclusion, and poverty alleviation that also affect Nepal. What Nepal can truly learn from the work of these Nobel laureates is the importance of creating an ecosystem in which new ideas and enterprises can develop without bureaucratic or exclusionary barriers. In the same way, government and businesses need to encourage creativity and openness to failure because progress depends not just on inventions, but also on systems, policies, and cultures that allow new knowledge to thrive. Similarly, the researchers’ work also suggests that Nepal needs a transparent governance system that focuses on inclusivity in order to financially empower its citizens.
Moving beyond these insights, Nepal needs to look at the Nobel Prize in Economics as a learning opportunity and develop a clear system to study the work of Nobel Prize-winning economists and share their ideas and recommendations in ways that are useful for Nepali society. Regular research, publication, and discussion of these works can help connect global economic ideas with Nepal’s own policy needs. Furthermore, policymakers should seriously consider these recommendations while formulating economic policies. Educators should introduce and explain the ideas of Nobel laureates to students, while students should be encouraged to develop the habit of studying and analysing their work. Such a mechanism can help build a stronger foundation for long-term and inclusive economic planning.
Aashutosh Sharma is an aspiring Chartered Accountant, currently pursuing the ACCA qualification at the Strategic Professional Level. He works as a research intern at the Nepal Economic Forum and has a strong interest in research, education, accounting, and consulting.
