The New Space Age: Beyond Global Order | FALL 2021
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global.upenn.edu/perryworldhouse
Space Economics and Law
Henry Hertzfeld, Research Professor, Space Policy Institute, George Washington
University
The Space Economy
The estimates for the “space economy”
that are being quoted endlessly by
advocates have to be carefully dissected.
There is no one denition of what the space
economy really is; some are referring to the
value of activity in space and on-orbit,
others to the full range of possible monetary
activity related to space, and still others
refer to revenues and expenditures of
terrestrial companies and governments’
space activities. It is the latter concept that
has seen the $1 trillion estimate for space
activities in 2040.
But, when evaluated, it is really nothing to
get very excited about. Most estimates of
the amount of revenue associated with
space are today somewhere between $350
B and $450 B annually. That is divided into
about $125 B (35%) for satellite services
(TV, telecom, radio, etc.), about the same
amount for all ground equipment sales,
$90 to $100 B (29%) are government
expenditures on space and about $10 B
(3%) is satellite manufacturing and
launching. (Note that there is likely double
counting in these totals because it is very
dicult to parse government expenditures
from commercial sales and there are many
other accounting and disclosure issues
with all of the economic surveys of space
activities.)
If one calculates the compound annual
interest growth for $350 billion over a 19-
year period from today, a $1 trillion total is
reached at a 6% annual growth rate. (If we
begin with the higher estimates of today’s
space economy, the growth rate will be
lower.) Although 6% is a reasonable rate of
growth, it is not spectacular or even so
large as to be particularly notable,
especially when it is likely that the
purchasing power of a dollar today will be
less as time goes on due to ination and
unpredictable changes.
That being said, what is extremely
important to understand is the remarkable
change in space technology over the past
15 to 20 years. Many space applications
have progressed from a largely R&D and
product demonstration phase to a mature
technology with systems designed,
operated, and relied upon by virtually all
nations as well as companies and
individuals. Turn o the space spigot and
we will create a serious problem: space
capabilities have become critical
infrastructure.
Although there are estimates, some as high
as $10 to 15 billion annually, of a very fast-
growing trend in venture capital and
related investments in space companies,
those too, must be evaluated very carefully.
First, about a third of that number is from
the very special class of angel investors
who have goals than go beyond near-term
prots. (And those investments are largely
in launch vehicles—a sector that rarely
makes any prots, but is very important to
space business.) Another large amount of
that total is in mergers and acquisitions
and in valuing IPOs and SPACs. For the
most part those investments are measured
by discounted expected future returns,
with values that oen reect very
speculative expectations.
Finally, there is somewhere between $1
billion and $2 billion of true new investment
