4 October 2023

Digital Technology Guru

Digital Technology Guru Reviews

The Changing Landscape of the Space Economy

2 min read
The Changing Landscape of the Space Economy

The space industry has undergone significant transformations since the landmark Apollo program of the late 1960s. Today, private companies like SpaceX, Blue Origin, and Virgin Galactic play a substantial role in the space economy, accounting for over 80% of the U.S. space economy in 2021. On the other hand, the U.S. government’s share of space spending stands at 19%, primarily due to increased military investments.

To understand the impact of these space-related innovations on the economy, the U.S. government has started tracking the size of the space economy. The U.S. Bureau of Economic Analysis has used both broad and narrow definitions to measure the economic impact of space.

The broad definition includes items such as rocket ships, launch pads, cell phone GPS chips, space education, and more. In 2021, the broad definition revealed that space-related sales amounted to over $210 billion, accounting for approximately 0.5% of the U.S. economy’s total gross output.

The narrow definition excludes satellite television, satellite radio, and space education. It is worth noting that while these categories represented a significant portion of space spending in 2012, they had decreased 2021 due to the shift towards streaming services for entertainment.

Taking a closer look at the data, it becomes evident that space’s share of the U.S. economy is diminishing. From 2012 to 2021, the relative size of the space economy, adjusting for inflation, decreased about one-fifth. Additionally, when using the narrow definition, the space sector’s inflation-adjusted gross output grew at an average rate of 3% per year, lower than the overall economy’s 5% growth.

The number of jobs in the space economy has also declined. In 2021, approximately 360,000 people worked in full- or part-time space-related jobs in the private sector, down from 372,000 a decade earlier. The government’s space-related job figures are more challenging to track, but the military’s Space Force and NASA are among the key contributors, with a combined workforce of just under 30,000.

While the U.S. has historically dominated the space economy, the landscape is changing. China and India are rapidly expanding their space economies, with China aiming to surpass the U.S. as the dominant space power 2045. China recently launched a space station, while India has numerous space-tech startups and a lunar mission underway. The competition in space is growing, and even though the U.S. maintains a strong foothold, its ability to maintain its lead remains uncertain as space mining and missions to Mars become the focus of the next frontier.

– U.S. Bureau of Economic Analysis.