Exploring the Unknown - NASA's History Office

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SPACE AS AN INVESTMENT IN ECONOMIC GROWTH
NASA Activities
The cumulative investment that the United States has made in civilian space activities
through NASA alone has been more than $200 billion over a period of nearly 40 years. 1
As with any federal expenditure, each year’s budget outlays pump money into the economy,
directly create jobs, and stimulate additional employment and income throughout the
nation. Although the distribution among occupations and regions may differ for NASAtype
expenditures, from the expenditures on new roads, housing, or welfare payments,
the overall multiplier effects are similar. Also, if any of the programs are eliminated, these
employment and income effects are eliminated.
What makes NASA and other R&D investments different is that they also stimulate the
productive capacity of the economy through the development and introduction of new
technology. New technology can make existing production methods more efficient, and it
can also create new products and services that not only stimulate new markets, industries,
and opportunities, but can also improve the way people do things and the overall quality
of life. These benefits and impacts on the economy are not immediate—it may take years
or decades for an idea to be transformed into a marketable product or service. Thus, the
benefits from R&D investments in space are more difficult to measure and more unpredictable
than the short-term benefits that accrue from the immediate jobs and income created
by direct federal spending.
The measurement difficulties center around the unpredictable ways that technology
is transferred and the problems inherent in tracing the progression of ideas and experiments
into consumer products whose sales contribute to the gross domestic product. This
process, even when the route to the marketplace is fast, may take years. For some fundamental
research, the process may take decades. The process of technology transfer will
include false leads, dead ends, and even products that are technical successes, but fail in
the marketplace. However, it also may generate major commercial successes. In many
cases, the R&D stage represents only a small fraction of the monetary investment necessary
for bringing a product or service to the market. Also necessary for economic success are
large-scale manufacturing technology, marketing efforts, advertising, product support, and
so forth. Many government-developed technologies that are highly useful for their design
objective in fulfilling a government mission need a large amount of additional R&D to
make them optimal for commercial markets. Tracing over time the many paths of technology
development and transfer and placing a value on the returns to the NASA R&D
component of these innovations continue to be challenges to the economic community.
Certain “big” technologies for which NASA has been responsible and those that have
been greatly stimulated through the space agency’s programs have made their way into
product and service markets with virtually no active government technology transfer program.
Examples of these technologies are communications satellites, the miniaturization
of electronic components, large management computer software applications, and
advanced composite materials. Historically, industry has performed about two-thirds of
NASA R&D under contract arrangements. Therefore, when a technology is developed
that is basically a better or more efficient way of serving a proven and existing market,
industry is already actively involved, knowledgeable, and often willing to commit the necessary
funds to modify the government product or service for the commercial market. Of
course, as time elapses, new consumer demands may emerge and grow from the original
space-related technology. The rapid growth of new satellite telecommunications products
and services offers an excellent example.
1. If this were translated to constant 1997 dollars, the investment would be more than $450 billion.