The Growing Role of Private Industry in the Space Industry
Category Business Thursday - September 7 2023, 20:28 UTC - 5 months ago The space industry has changed drastically since the late 1960s due to private sector advances, with companies like SpaceX, Blue Origin and Virgin Galactic making up 80% of the US space industry in 2021. The space sector's total output is estimated to be over US$210 billion as of 2021, down from 0.8% in 2012. Private sector investment is growing, while government investment is dwindling, with US space related spending projected to rise to over US$500 billion over the next decade.
Thursday - September 7 2023, 20:28 UTC - 5 months ago
The space industry has changed drastically since the late 1960s due to private sector advances, with companies like SpaceX, Blue Origin and Virgin Galactic making up 80% of the US space industry in 2021. The space sector's total output is estimated to be over US$210 billion as of 2021, down from 0.8% in 2012. Private sector investment is growing, while government investment is dwindling, with US space related spending projected to rise to over US$500 billion over the next decade.
The space industry has changed dramatically since the Apollo program put men on the moon in the late 1960s. Today, over 50 years later, private companies are sending tourists to the edge of space and building lunar landers. NASA is bringing together 27 countries to peacefully explore the Moon and beyond, and it is using the James Webb Space Telescope to peer back in time. Private companies are playing a much larger role in space than they ever have before, though NASA and other government interests continue to drive scientific advances.
I’m a macro economist who’s interested in understanding how these space-related innovations and the growing role of private industry have affected the economy. Recently, the U.S. government started tracking the space economy’s size. These data can tell us the size of the space-related industry, whether its outputs come mainly from government or private enterprise, and how they have been growing relative to the economy at large. Companies like SpaceX, Blue Origin and Virgin Galactic made up over 80% of the U.S. space economy in 2021. The government held a 19% share of space spending, up from 16% in 2012 – mostly thanks to an increase in military spending.
Ways to measure the space economy .
There are many ways to measure economic success in space. One way is the economic impact. The U.S. Bureau of Economic Analysis, which tracks the nation’s gross domestic product and other indicators, recently began to monitor the space economy and published figures from 2012 to 2021. The Bureau of Economic Analysis calculated the impact of space using both broad and narrow definitions.
The broad definition comprises four parts: things used in space, like rocket ships; items supporting space travel, like launch pads; things getting direct input from space, like cell phone GPS chips; and space education, like planetariums and college astrophysics departments.
In 2021, the broad definition showed that total space-related sales, or what the government calls gross output, was over US$210 billion, before adjusting for inflation. That number represents about 0.5% of the whole U.S. economy’s total gross output.The Bureau of Economic Analysis also has a narrow definition that excludes satellite television, satellite radio and space education. The difference in definitions is important because back in 2012 these three categories represented one-quarter of all space spending. However, by 2021, they only represented one-eighth of spending because many people had switched from watching satellite TV to streaming movies and shows over the internet.
Space’s share of the economy .
A closer look at the data shows that space’s share of the U.S. economy is shrinking. Using the broad definition and adjusting for inflation, the relative size of the space economy fell by about one-fifth from 2012 to 2021. This is because sales of space-related items – everything from rockets to satellite TV – have barely changed since 2015. Using the narrow definition also shows the space economy is getting relatively smaller. From 2012 to 2021, the space sector’s inflation-adjusted gross output grew on average 3% a year, comared with 5% growth for the overall U.S. economy.