Exploring the Unknown - NASA's History Office

Chapter Three
Space as an Investment
in Economic Growth
by Henry R. Hertzfeld
Introduction
The research and development investments that NASA has made have greatly affected
the economy of the United States and the world. New industries have been created.
New technologies have been advanced from the laboratory to the marketplace more
quickly than if there had been no space program. Not only have jobs and income been
created, but new ways of viewing the world now exist and other innovations that can be
traced to NASA requirements and investments have improved the quality of life.
Describing these advances is relatively easy. Measuring them is difficult. This chapter
describes various economic methods that have been applied to the problem of the measurement
of NASA investments, as well as the results of their use. It shows that economists
are not in agreement in finding a clear and best approach to measurement. It is also clear
that no one measure is a comprehensive indicator of NASA impacts and benefits.
This chapter also tracks two other issues. The first is the political and social need for
NASA to measure its impact on the economy. From the beginning of the Apollo program
until funding started to decrease in the late 1960s, NASA had no pressing need to justify
its program from an economic perspective. Falling NASA budgets and very high national
visibility greatly increased the need to explain to Congress and the public the usefulness
of the space program. Also, with the growing budget deficit and social programs of the
1970s and 1980s, NASA had to compete for its share of the discretionary budget against
many other national priorities. Finally, with the end of the Cold War in the late 1980s, the
space race with the Soviet Union was over, and the pressure to view NASA and space investments
from the perspective of a rate of return to the nation from its investments became
paramount.
The second issue reflects an overall economic-related push within the United States
to collect more and better data on research and development (R&D) and to expand the
available methodological tools in economics to analyze those data. It is no coincidence
that this trend also parallels the overall growth of R&D performed in large laboratories
and institutions across the United States following World War II, including the establishment
of the National Science Foundation, NASA, and the Department of Energy (which
included the Atomic Energy Commission), as well as the very steady and rapid growth of
the National Institutes of Health. Prior to World War II, successful government programs
in technology development and transfer were limited to the Agricultural Extension
Service and NASA’s predecessor, the National Advisory Committee for Aeronautics. With
the great expansion of R&D programs in government, there was an emphasis on documenting
and measuring results to develop public support, convince Congress to continue
and expand funding, and better understand the role of R&D and technological innovation
in society. By the early 1990s, as described below, the mandate to develop performance
measures for R&D had changed from a voluntary and ad hoc effort to one that is
now mandated by congressional legislation.
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