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Measuring the Economic Impact of Federal Research and Development Investments in Civilian Space Activities
Pages 265-304

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From page 265...
... for civilian activities in ache exploration and use of outer space. Expressed in 1985 dollars, this investment has totaled over Sl5Q billion, with current federal civilian space R&D expenditures amounting to about $6 billion yearly.
From page 266...
... And, ache studies provide a benchmark for discussing ache appropriate economic criteria to be applied to future programs. DEFINITIONAL CONCERNS AND THE SCOPE OF STUDIES REVIEWED This paper will focus only on civilian space expenditures .
From page 267...
... code. ~ large portion of commercial space activity falls under SIC 3769 guided missiles and space equipment.
From page 268...
... Data are now available on the number and types of priorate firms that are investing in space launch vehicles and satellite systems, space-rel~ced support services, and space research and also on those companies that are planning for space manufacturing at a commercially opportune time. This indicates the growing economic impact of space activity and sets the stage for more direct and explicit economic analyses of the space industry in ache future.
From page 269...
... Me Prague of the aggregate production function approach is more in structuring thought and providing a framework for analysis than in quantifying results. The aggregate production function model assumes that a formal relationship exists between it&)
From page 270...
... Much of the study was a subj ecti~re review of cases of successful technology transfer, but a maj or effort was wade to calculate the macroeconomic impacts. The study took a national income accounting approach, following ache methodology of Solders pioneering econometric work in analyzing the reruns deco R&D.
From page 271...
... Chase analysts estima~ced a production function for the United Stances based on a potential GNP Dime series. (the potential GNP is not the she as the published figures- - it is an estimate of what ache GNP would be if full employment existed.
From page 272...
... S . Bureau of Labor Statistics to attempt to measure the productivity changes resulting from NASA expenditures at an industry level, using the production function approach and an equation for every incus try that is tied closely to aerospace production.
From page 273...
... A surrey Approach to Macroeconomic Analogs is: The European Space Agency S Judy In 1978, the European Space Agency (ESA) releaser a study of the economic benefits of its contract ~ see Fitussi and - 269
From page 274...
... The study team conducted an extensive se~c of interviews wit h ache maj or industrial contractors to ESA aimed at assessing the Prague to the contractors of doing advanced technological work for the space agency. Benefits were grouped into four maj or types: technological advan~cages, cormse~c~al advantages, advantages for organization and methods, and ad~ran~cages for the work factor ~ labor productivity from an increase in personnel knowhow and maintenance of a highly skilled production teams.
From page 275...
... Benefit/cost analysis to evaluate ache success or failure of public sector proj acts is based on this theory. More often than not, individual proj ects are analyzed to determine their consumer surplus.
From page 276...
... S ince the purpose of this paper is to report on the overall economic impacts of the space program, only two benefit/cos~c studies will be analyzed. Both attempted to measure a summation of benefits of specific technologies and technology transfer from the government deco the price economy.
From page 277...
... Inc.. Technology Transfer Study For many years, NASA has had a formal technology transfer program to disseminate information and develop space technology for nonspace uses.
From page 278...
... Since ache costs of developing the initial technology would have been funded anyway because of the mission- oriented purposes of the space agency, then the true costs of bringing the innovation into the commercial world are ache costs of transferring it. Thus, "but fore the existence of the transfer program, the benefits never would have occurred.
From page 279...
... Hundreds of technology assessment and technology forecasting studies have been conducted by NASA for specific aerospace technologies . Many were subj ec~ci~re, quali~cati~re evaluations rather than fo real economic analyses .
From page 280...
... ) An analys is of the data for 87 inventions indicated that the time span be - -een the first award of NASA funds deco ache contractor and ache date of first reported commercial us,3a~rerages 5.2 years, with a range of ~ to 15 years ~ see Her~czfeld ~ .
From page 281...
... Such patent waivers can take ewe forms: advance or specific waivers . Advance waivers are granted to a contrac tor upon application, usually in the early stages of the contract before any inven~cions are discovered.
From page 282...
... Electrical machinery, communications equipment, and ~nstrumen~cs together accounted for over 69 percent of all commercialized specific waivers . The transportation equipment incus try (which accounts for approximately 60 percent of all NASA outlays)
From page 283...
... Over the years, NASA has not gone to court to protect its domestic patents from unauthorized domestic use. ~ Therefore, rather than focus on the tow rate of commercialization of licenses when compared to all patents, i~c is more appropriate to compare the 54 commercialized inventions to ache total of t97 inventions that were attractive enough for bus iness to want to develop into commercial products.
From page 284...
... Eighty- seven percent of Ache users that reported corporate benefits from the information received found that Chose benefits were measurable within s ix mor.~chs, and ~ for 98 percent, within one year c Firms are more likely ~ca digest and use information Chat relates ~co their production process technology more quickly than information rela~ced to developing and marketing new products. The ORI data support the hypo~chesis ~chat information programs such as the Tech Brief Journal and follow-up TSP' s are extremely useful to bus inesses in improving produc~ci~rity and enhancing technological deve lopment in production processes .
From page 285...
... By s~cudying ache historical price fluctua~cions of the crop and by analyzing the potential dampening of those fluctuations due deco less uncertain~cy about near- term total crop production, the benefits of decreased speculation in ache futures otarice~c, and, therefore, more stable prices, could be assessed. The results did show ache expected trends, but were controversial because of the study' s - 281
From page 286...
... Economic pressure deco allocate funds more efficiently among projects and to justify new R&D programs was felt for ache first time in NASA history. Congress and the Office of Management and Budget asked pointed questions about what economic returns could be expected from additional expenditures.
From page 287...
... As shown by various macroeconomic analyses, ache direct and indirect uses of the products of space technology have an impact on the quality and productive ty of almost all sectors of the economy.
From page 288...
... Cat is not recognized clearly by many is that any private firm will be in a partnership of some form with the government and dependent upon government infrastructure to launch, operate, and maintain facilities in space. While things are changing slowly, ache government still is the dominant supp lier of space equipment, facilities ., and is~frastn~cture.
From page 289...
... With ache exception of certain Marx niches, such as the launch of communications sa~celli~ces to geosynchronous orbit, the commercial side of ache business is limi~ced. And, even where new launchers have been built, as with the European Space Agency' s Ariane rocke C, a large government subs idy was provided .
From page 290...
... But, the private sector's success in the use of the space environment for manufacturing cannot be a reality until the next century, if ever. A few near-~cerm successful proj ects are possible, but for any real benefits, given the enormous up- front capital investments required for space industry al R&D, it will take many false stares, many new proj ects, and a working partnership be tween go~rernmen~c and incus try .
From page 291...
... But, traditional business tools such as discounted cash flows and return on investment app lied to tile costs in research and subsequent production, distribution, and eventual profits will not show this to be a prudent business ~ren~cure with a rate of return equal to or greater than other opportunities for corporate investments . This research proj act will be cons idered a success because of other factors, including good publicity and advertising, on- the-j ob training and learning of cutting- edge technology for employees, and the potential for improving terrestrial pharmaceutical production processes.
From page 292...
... RECENT CHANGES IN ECONOMIC EVALUATIONS OF SPACE ACTIVITY As described above, space R&D is as much a political activity as an economic activity. Civilian space programs have been in existence for nearly 30 years.
From page 293...
... The economic j ustification for continued government support for such civilian space activities as the space station is centered around ache potential for manufacturing and Ache support of commercial uses of space facilities. (Of course, now, as in the panic, the economic reasons are only one part of the justification process, which also includes scientific, engineering, exploratory, and technological leadership, plus inte~`a~cional competition, as reasons.
From page 294...
... We do not and cannot know what those economic recut ns will be . The returns may well be in new products and improved processes, or the current space proj ects may create an infrastructure that will lead to other space pro]
From page 295...
... Better economic measures could help to shape government R&D policy toward projects ~ ~t will both provide needed public goods and s ~ imniate further private investment leading to commercial success . ECONOMIC MEASURES OF SPACE R&D TO BE AVOIDED First, no economic study should attempt deco put a "bottom lines ratio or return on space R&D investments.
From page 296...
... Over the years, the sophistication of the economic analyses of space R&D has improved. Much is stilt unknown, and new methods, models' and data are being tested to measure returns to R&~.
From page 297...
... In other words, economic analys is of R&D investments even in the "pure " case of a profit-oriented company may involve intangibles that to not fit easily into a standard economic measurement framework. Most often, business analyses of space R&D investments are held as proprietary by a company.
From page 298...
... Prepared under NASA contract NASH- 2030 . Midwest Research Institute, November 1971.
From page 299...
... ESA SP-151. Paris: European Space Agency, September 198Q .
From page 300...
... The ttaJue of Info rmacion for Crop Forecasting with Bayes~an Speculators: Theory and Empirical Results. Prepared under NASA contract NASH- 2S58 .
From page 301...
... Douglas Corporation, March 19 84 .
From page 302...
... NASA Tech Brief Program: A Cost-Benefit EvaJuar~on. Prepared under NASA contract NASW-2892.
From page 303...
... Space Manufac~curing. Prepared under NASA contract NAS 8- 31353 .
From page 304...
... Civilian Space Policy and Applications.


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