Author: Space Economy Academy
The Space Economy, has been defined by the OECD as the The full range of activities and the use of resources that create value and benefits to human beings in the course of exploring, researching, understanding, managing, and utilising space.
The Space Sector over the last decades completely changed under multiple aspects, from the number of players, the type of players (public and private (1)), the type of investments, the geographical distribution and much more. Probably the most important revolution within the Space Economy is given by the fact that the Space Sector is not anymore a separate field, but its impact is visible in both Space and Non-Space industries. The Space Economy in the 21st Century is a key element in the approach and development of other traditional industries (such as agriculture, medicine, finance, and much more).
The so-called Space Race, between the Soviet Union and the United States, now became the Space Economy. Between 1957 and 2022 the number of Countries that participate to Space Programs, grew from two to more than eighty Countries. The growth is expected to continue in the next decades (2).
The two segments characterizing the Space Economy are the Upstream and Downstream Segments (3). The Upstream includes the technology in the direction from Earth to Space, while the Downstream includes the technology in the direction from Space to Earth.
The Upstream Segment includes:
- Space and Ground Research activities,
- Space and Ground Manufacturing (including Launchers)
The Downstream Segment includes:
- Space Operations for Terrestrial use (e.g. GNSS data)
- Products and Services delivered for Earth Applications.
Space Economy and the International Politics
The importance of the Space Economy grew over the years, and was brought to the attention of the international politics. Technologies, research, applications, improved our daily lives, and benefits have been visible at both social and economic level.
For the first time in the history of the G20, in October 2020, the Secretariat chairing the meeting in Saudi Arabia included the Space Economy as one of the pillars in the agenda, considering Space as one of the main elements to maintain a peaceful environment on the Planet, as well as an important contributor to the international economy.
The Space Economy was included under the name “Promoting Space Cooperation” within the goal “Shaping New Frontiers” [3].
The major contributor to the G20 was provided by the UNOOSA (United Nations Officer for Outer Space Affairs), which highlighted the importance of the Space Sector through the major space programs mainly under Earth Observation and Satellite Navigation. The Space Sector is estimated to contribute to over 10% of the Gross Domestic Product (GDP)[4]
Among the top priorities at international level, is the fostering of green economies. Space became a major contributor on this respect, and became a catalyst of the Sustainable Development Goals (SDGs) [5]. Despite there is not a dedicated SDG for the Space Sector, we talk nowadays about the so-called “Space for SDGs” [6].
Space Economy Education
The new approach to the Space Sector led to the development of dedicated courses specifically for the Space Economy. The approach is now towards the Business side of the Space Sector rather than the traditional Engineering approach. Universities provide the students with the fundamentals of the Space Sector, preparing the engineers to work and develop Space Technologies.
Nevertheless, the major industries and agencies show the need of figures which are able to establish Public-Private Partnerships. New positions arise on a regular basis with the titles of “Strategic Innovator”, “Space Transformation Officer”, “PPP Specialist”, “Space Ecosystem Officer”, and many more.
These figures often require a technical background, with a broad knowledge about Project Management, International Ecosystems, Space Policy. These figures are 360degrees employees are able to define the best strategies for the organization and institution to remain competitive.
Start-Ups in the Space Sector
A Start-Up is a new company which brings a new or improved service or product into the market. This new type of company became more and more popular at international level. Also in the Space Sector a numerous amount of Start-Ups is raising all around the world (4). In order to be founded, a Start-Up often requires a high level of investments. These come from both the public sector (e.g. Incubation programs) and private investments (e.g. Business Angels) [8].
The Start-Ups in the Space sector contributes to both the Upstream and the Downstream Segments, including the manufacturing, services, and applications using Space Data [9]
The foundation of a Start-Up and its relationship with the already established industries and agencies is regulated according to local regulations. Normally it includes multiple types of PPPs (Public –Private Partnerships). Agencies allow to sign contracts with low share, with respect to the traditional 50% required contribution to the project costs for PPPs established between big players [10].
Investments in Space Start-Ups are well collected by Bryce Tech [13]. The amount of investments in 2020 is of about 7.6 Billion of USD, distributed over a total 124 Start-Ups. The market is mainly driven by nine Start-Ups, which alone account for the 80% of the full Start-Ups. SpaceX is the leader of the nine Start-Ups, accounting , along for the 30% of the entire investments.
Top Drivers of the New Space Economy
The New Space Economy is driven by a combination of multiple drivers [11]. Together with technology, multiple other factors and market drivers influence the development of this global phenomenon. The most important element has already been addressed under the Intenrational Politics interest in the Space Sector. The SDGs are driving the development of the Space Economy, when talking for example about the SDGs.
Space needs are another important driver, and in particular the Space Debris issue is pushing towards further technologies and development in the sector, and new start-ups arise around the world to try to solve the issue.
The economic aspect is another important driver, where the commercial aspect of the space sector is creating new businesses , and more and more industries and agencies are keen to establish PPPs .
New market requirements are also pushing new developments in and from the space sector. The Security issue is among the most important ones, and not only in ground equipment, as well as the transmission and protection of data via satellite infrastructure.
If Internet is in the top technologies used nowadays by the largest part of the population, satellite internet is becoming another important frontier in the Space Sector, which connect Space with Earth.
What is coming next? What are the drivers which are still developing under the Space Economy? Two important newcomers in the Space sector are the Space Mining and Space Tourism. Many companies are exploring these two markets, although there are still many open points to be established.
Investments in the Space Sector
The investments seem not to be an issue in the Space development. Both public and private entities invest in the Space Sector (5).
At global level, governments invest in Space Agencies and technologies all around the world, and private investors, VC and Business Angels do the same in parallel, sometimes together.
The 4th October 1957, the Soviet Union launched the first satellite in space, Sputnik 1. The satellite was small (about 58 cm), light (about 84 Kg) and only orbited the Earth for less than 100 minutes. It was the first step, which started the new technological, scientific as well as politic and military development in the space sector. Only in 1969, the commander of Apollo 11, landing on the Moon, announced the words “The Eagle has landed” representing a new step in the Space Age.
Between 1957 and 2018, the players in the Space sector grew from two to more than eighty, registering eleven independent orbital launches .
Multiple players increased the competition, and increased also the investments in multiple segments of the Space Sector, in resources and capabilities, to foster a sustainable growth.
Alone, the government expenditures for Space Programs in 2018 reached a value of over 70B USD. Half of which are all located in the United States, which show the supremacy in the Sector .
Even the analysis and reports from Morgan Stanley show the importance and the positive trend in the investments in the Space Economy, which is defined as the new frontier [15].
The overall economic impact of the Space Economy in 2019 is estimated to be about 360B USD by Bryce Tech. This number keeps growing over the years.
Internal Links:
SEAC – Space Economy Academy
REFERENCES.
- Journal of Strategic Security, Vol. 13, No. 3 (2020), pp. 75-98 (26 pages), Published by: University of South Florida Board of Trustees. Jack B. Chaben. URL: https://www.jstor.org/stable/26936546
- The Journal of Economic Perspectives, Vol. 32, No. 2 (Spring 2018), pp. 173-192 (20 pages), Published by: American Economic Association, Space, the Final Economic Frontier, Matthew Weinzierl. URL: https://ww w.jstor.org/stable/26409430
- The American Economic Review, Vol. 102, No. 3, PAPERS AND PROCEEDINGS OF THE One Hundred Twenty Fourth Annual Meeting OF THE AMERICAN ECONOMIC ASSOCIATION (MAY 2012), pp. 447-452 (6 pages), Published By: American Economic Association, Klaus Desmet and Esteban Rossi-Hansberg, Innovation In Space. URL: https://www.jstor.org/stable/23245573
- The Industrialization of Space, The Journal of Epsilon Pi Tau, Vol. 5, No. 2 (Fall, 1979), pp. 4-11 (8 pages), Published By: Epsilon Pi Tau, Inc. URL: https://www.jstor.org/stable/43659701
- Institute for Defense. Analyses Report Part Title: Front Matter. Report Title: Measuring the Space Economy. Report Subtitle: Estimating the Value of Economic Activities in and for Space. Report Author(s): Keith W. Crane, Evan Linck, Bhavya Lal and Rachel Y. Wei. Published by: Institute for Defense Analyses (2020) Stable
