The Economic Impact of the Space Economy: Private investment promises new frontiers in extraterrestrial enterprise

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The Economic Impact of the Space Economy: Private investment promises new frontiers in extraterrestrial enterprise

The Economic Impact of the Space Economy: Private investment promises new frontiers in extraterrestrial enterprise


Half a century after the birth of the Space Age, the Space Economy era has dawned. Whatever it brings by way of innovation, opportunity, and changes to humanity, in addition to its economic impact, there is no disagreement that “the commercial space age is here,” as the Harvard Business Review (HBR) proclaimed last year.

Primary drivers of the new age include “profound technological change, accelerated capital formation, and private space flight missions,” according to one Morgan Stanley sector analyst. Many cite May 2020 as the birth of this new era, because that’s when Elon Musk’s SpaceX, under contract from NASA, launched the first private for-hire flight to put humans in space.

The sector was already generating an estimated $366 billion in revenue in 2019, according to the authors of the HRB study, but that stands to grow substantially as increasing investment from private sources joins government spending on national and military space programs.

In the private sector over the past decade, more than $232 billion in equity investment has been made in 1,664 companies in the space business, according to venture investment firm Space Capital — $39 billion of that in 2021. These figures don’t include investments in private space ventures, like SpaceX and Jeff Bezos’s Blue Origin.

However, the true economic impacts are, like space, largely unknown. Global government spending on space activities totaled about $79 billion in 2019, according to the Organization for Economic Co-operation and Development, and “will play a role in furthering social well-being and sustainable growth” going forward. But the organization’s recent reports prepared for G20 Space Leaders’ meetings note “a lack of internationally comparable economic data” along with methodological issues and difficulties quantifying impacts that impede development of a sustainable space economy.

To address this issue, some of today’s most vital research in the space field involves accountants and economists undertaking economic measurement and data collection.

The same year SpaceX launched this new era, NASA released its first report on the economic impact of its spending, conducted by the University of Illinois, Chicago’s Vorhees Center. Meanwhile, the U.S. Bureau of Economic Analysis initiated a landmark research project to measure the expanding value of the commercial sector’s economic impact, and began tallying the benefits provided by satellites, rocket launches, GPS navigation, and other space-based activities.

Additionally, the United Nations Office for Outer Space Affairs launched a Space Economy Initiative in 2020, to strengthen the sector capabilities of emerging and non-space faring countries.

The research reported in HBR examined how government-funded space activity has evolved into a new model in which private priorities are addressing critical needs, citing examples of growing commercial privatization spanning space transportation, manufacturing, infrastructure operations, and even consumer goods (the latter exemplified by construction of an espresso machine capable of functioning in a zero-gravity environment onboard the ISS).

Meanwhile, commercial space advances have accelerated. Blue Origin and publicly traded Virgin Galactic have now put humans in space on suborbital commercial flights; this January Virgin Orbit launched its first commercial cargo to orbit, and Astra [the sponsor of Nasdaq’s Space Economy series] plans to do the same early this year. The UN Space Economy Initiative credits steadily decreasing launch costs with enabling 80 countries to have launched satellites into orbit by now, compared to only 15 in the early 1980s.

Also in 2022, SpaceX is slated to launch its first heavy lifter Starship rocket, which promises to radically lower orbital lift prices, and support human travel to the Moon and Mars. Amazon is scheduled to put the first of thousands of satellites for its Project Kuiper constellation into low earth orbit (LEO), providing reliable, low-cost digital connectivity to underserved areas across the globe, as SpaceX is doing with its in-construction Starlink constellation.

Boeing, Lockheed Martin, United Launch Alliance, and Northrop Grumman in the U.S., and Russia’s private Success Rockets, also have developed launch systems to meet growing demand for government and commercial space services. 

These advances are bringing expanding terrestrial benefits from job creation to improvements in climate protection, disaster prevention, and virtually every other field of human endeavor. NASA’s economic impact report noted the more than 2,000 spinoff technologies it has created include a quickly developed ventilator for Coronavirus patients, cleared for emergency use by the FDA.

Most commercial activity to date has been “space for earth” focused, such as communication and navigation services. But growing interest and investment in space tourism, asteroid mining, and space habitat construction may signal, according to the HRB report, “the first stages of a true space-for-space economy,” which some speculate could ultimately eclipse the one serving earth. But the space economy’s future faces threats ranging from geopolitical rivalries to satellite collisions that could render vast areas of orbital space unusable. (Tip: space traffic management is seeing growing investor interest.)

Given the upside and growth potential, it’s no wonder opportunities in space are receiving a warm welcome among investors on earth.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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