Interview with Philippe Aghion

Filippo Gaddo, Managing Director at A&M and SPE Councillor, interviewed Philippe Aghion, Professor at the College de France, INSEAD and at the London School of Economics, and author of the book ‘The Power of Creative Destruction: Economic Upheaval and the Wealth of Nations’.

In this engaging interview, Filippo and Philippe delve into the crucial role of innovation in driving long-term economic growth, with a focus on Europe’s position in the global innovation landscape. Aghion, drawing from his Schumpeterian framework of creative destruction, emphasizes that growth stems from successive waves of innovation, where entrepreneurs are motivated by temporary monopoly rents but face eventual displacement by newer technologies. He warns against both monopolistic stagnation and overregulation, both of which can stifle innovation. A key theme is the distinction between catch-up and frontier innovation. Aghion argues that Europe has largely remained stuck in mid-tech incrementalism and needs to evolve into a frontier innovator like the U.S. To achieve this, reforms are essential: creating a unified internal market, expanding venture capital, strengthening basic research funding, and establishing institutions akin to the U.S.’s DARPA. The future of the European economy, he suggests, hinges on embracing innovation-friendly policies as outlined in recent reports by Mario Draghi and others. Aghion critiques rising protectionism and stresses that Europe’s best response to global economic shifts, including U.S. tariffs, is to double down on innovation rather than resort to retaliation.
Innovation is crucial to productivity, which is key for growth, which in turn leads to prosperity - this interview thus touches on the core of our profession.