MEASURING THE ECONOMIC IMPACT OF THE SPACE SECTOR KEY INDICATORS AND OPTIONS TO IMPROVE DATA

Background paper for the G20 Space Economy Leaders’ Meeting (Space20)

SAUDI ARABIA 7 OCTOBER 2020

This document was prepared by the Organisation for Economic Co-operation and Development’s Space Forum (the OECD Space Forum) in the Directorate for Science, Technology and Innovation. It presents a selection of indicators and options for improving the economic measurement of the space sector. It was prepared as an input for discussions at the Space Economy Leaders Meeting (Space20), organised within the framework of the G20 under the auspices of the Saudi Arabia Presidency in 2020. The arguments employed herein do not necessarily represent the official views of the member countries of the OECD or the G20.

The OECD Space Forum will continue its mission to improve the measurement of the space economy and its broader impacts, in order to help countries formulate better evidence-based policy analysis. The Secretariat wishes to acknowledge the support provided by the organisations forming the OECD Space Forum’s Steering Group: The Canadian Space Agency (CSA), Canada; Centre National d’Etudes Spatiales (CNES), France; Deutsches Zentrum für Luft- und Raumfahrt (DLR), Germany; Agenzia Spaziale Italiana; (ASI), Italy; the Korea Aerospace Research Institute (KARI), Korea; the Netherlands Space Office, the Netherlands; the Norwegian Space Agency and the Ministry of Trade, Industry and Fisheries, Norway; the Swiss Space Office, Switzerland; the UK Space Agency, United Kingdom; National Aeronautics and Space Administration (NASA), United States; and the European Space Agency (ESA).

This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

Cover image: Jason Leung on Unsplash.

© OECD 2020

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Key messages

• Public investments represent the bulk of funding in space activities, with G20 governments’ space budgets amounting to some USD 79 billion in 2019. This investment can support broad socio-economic purposes and the development of scientific capacities, in addition to national security and governance objectives. • As the applications of space technologies multiply, so do the derived impacts. Space activities can yield diverse economic benefits, including via employment, revenues, technological and scientific excellence, and innovation. • The number and variety of indicators tracking the development and impact of space activities have grown significantly in recent years. Several G20 countries have developed national surveys and are showing leadership on improving statistical measurement of the sector. Strengthening the evidence base in this way contributes to more informed public policies and can improve the management, allocation and focus of public investments. • Yet challenges remain, including a lack of internationally comparable economic data as well as methodological issues, such as lengthy time lags between initial investments and realised outcomes, and impacts that are difficult to quantify (e.g. scientific discoveries, enhanced national security). • International co-operation can play a key role in improving measurement of the space economy and its broader impacts. Making collective progress on the availability and quality of data on the state of the space sector, as well as reinforcing the evaluation and impact assessment frameworks of space programmes, are important steps to achieving a sustainable space economy.

Introduction

Space activities are expanding globally, with a record number of countries and commercial firms investing in space programmes. Never before has there been so much interest in the space economy, with satellites in orbit registered in over 80 countries and growing public and private investments. Ever more “down-to- earth” activities are derived from satellite signals and data, contributing to new economic activities often far removed from initial investments in space infrastructure. Space activities also provide some of the most successful illustrations of international co-operation (e.g. the International Space Station; and the Space and Major Disasters Charter, a co-operation between 17 space agencies to provide free satellite data to those affected by disasters). At the same time, as the use of the Earth’s orbits accelerates, with deployment of mega-constellations for satellite broadband, a new and pressing challenge to the long-term sustainability of space operations will be the accumulation of space debris (Undseth at al., 2020). The lion’s share of initial investments in launchers, satellites and other space-related infrastructure is made by governments, which increasingly try to measure the impact of space programmes and the application of space technologies on the economy and society. Tracking the development of the space sector and its impacts contributes to more informed public policies and can improve the management, allocation and focus of public investments. Nevertheless, this can be a challenging task, due to a scarcity of economic data, long time lags between the initial investments and realised outcomes; and more fundamentally, the evolving nature of the space economy itself and its increased connections with other economic sectors. G20 economies account for the bulk of government funding of space activities and are leaders in space research and innovation. In this context, G20 economies have a strong interest in better understanding the space sector and its impacts, to more robustly underpin policy actions for a sustainable space economy. This background note addresses these issues, presenting indicators and options on how to improve measurement of the space economy.

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How much do G20 governments invest in space programmes?

Public investments represent the bulk of funding in space activities, amounting to some USD 79 billion in 2019. Governments invest in space capabilities to support broad socio-economic purposes and the development of scientific capacities, in addition to national security and governance objectives. Countries with space programmes have moved from being an exclusive club, relying on their defence and aerospace industries, to a much wider group of developed and developing countries, with very diverse capabilities. One of the most useful indicators to measure the intensity of space funding is the ratio of space budgets to GDP (Figure 1). In 2019, the budgets of the United States and the Russian Federation accounted for about 0.2% of their national GDP, followed by France and Saudi Arabia at 0.1%. Saudi Arabia announced a budget of USD 1 billion in 2019, which places it among the top institutional investors in space as a share of GDP.

Figure 1. Government space budget estimates for G20 countries As a share of GDP in 2019 (%)

United States¹ 0.243 Russian Federation¹ 0.179 Saudi Arabia¹ 0.126 France 0.104 Japan 0.077 India 0.064 Italy 0.058 China¹ 0.055 Germany 0.047 Korea 0.030 United Kingdom 0.024 Canada 0.016 Argentina 0.009 Brazil 0.006 Indonesia 0.005 South Africa 0.005 Australia 0.003 Turkey¹ 0.003 Mexico 0.001

0 0.05 0.1 0.15 0.2 0.25 0.3 %

1. Conservative estimates. Budgets include data for civil and defence programmes, when available. For European countries, national estimates include contributions to the European Union, European Space Agency, Eumetsat and other international programmes, where applicable. The figure does not include the aggregate budget for the European Union. Source: Government budget sources and OECD databases.

The majority of G20 economies’ space budgets constituted less than 0.05% of GDP in 2019 (including civil and military space activities where data are available). Within these budgets, government investments in space R&D are generally much smaller than other government-funded research in domains such as health, agriculture or energy.

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What is the space economy?

The space economy can be defined as “the full range of activities and the use of resources that create and provide value and benefits to human beings in the course of exploring, understanding, managing and utilising space” (OECD, forthcoming). It goes well beyond the space manufacturing sector, also comprising the increasingly pervasive impacts of space-derived products, services and knowledge on economies and societies. For measurement purposes, the space economy can be divided into three components, as elaborated in Figure 2: • The upstream sector (e.g. R&D, manufacturing and launch) • The downstream sector (space infrastructure operations and “down-to-earth” products and services that directly rely satellite data and signals to operate and function) • Activities that are derived from space-derived activities but not dependent on it to function (e.g. technology transfers from the space sector to the automotive or medical sectors) Relevant actors and activities are identified by a combination of industry surveys and statistical analysis.

Figure 2. Defining the perimeters of the space economy

Source: OECD (forthcoming), Handbook on Measuring the Space Economy, second edition.

Estimated annual global commercial revenues from the space sector are in the range of USD 280-300 billion (OECD, 2019). The bulk of the revenues come from commercial satellite services (USD 126-130 billion) based on satellite capacity (e.g. telecommunications signals), while space systems’ manufacturing are valued at less than USD 20 billion, and often sustained by government procurement. The second largest share of revenues (USD 125-130 billion) consists of consumer equipment, which is a market dominated by consumer electronics companies (e.g. devices and chipsets to receive positioning signals, satellite television dishes). But space activities have impacts far beyond commercial revenues, with spillovers in many segments of the economy, for instance in agriculture, transport and the environment. Technology transfers from initial space exploration and human spaceflight missions also find their way into many diverse commercial products (e.g. medical imagery, water and air purifying systems). A report commissioned by the US

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Department of Commerce estimates that in the United States alone, the Global Positioning System (GPS) may have generated socio-economic benefits worth some USD 1.4 trillion since its introduction in the 1980s (O’Connor et al, 2019).

What are the impacts of space activities and how do we measure them?

As the applications of space technologies multiply, so do the derived impacts (Figure 3).The most commonly identified benefits of space activities include positive impacts on GDP through employment and revenue gains, diverse economic benefits – especially cost avoidances associated with space-based meteorological weather observations – , technological and scientific excellence, improved food safety, and innovation (OECD, 2019). Space-based infrastructure plays an increasing role in supporting critical societal functions such as telecommunications, finance and utilities. As an illustration, space manufacturers and agencies contributed actively to the response efforts during the COVID-19 crisis, by producing medical equipment, providing storage and processing capabilities for modelling and other research needs, and studying impacts. Space actors also provided high-speed connectivity to remote locations (e.g. establishing links to remote hospitals, residential and small business customers, and deployment of online solutions schooling) as well as earth observation imagery for industry intelligence and monitoring of remotely located infrastructure (OECD, 2020).

Figure 3. From investments in the space sector to impacts

The number and variety of indicators tracking the development and impact of space activities have grown significantly in recent years. For instance, advances in bibliometric data and analysis have made it easier to develop proxies for scientific excellence and international collaboration (Figures 4 and 5). Figure 4 shows the geographic distribution of highly-cited scientific papers in space literature produced by G20 economies1, and how this has evolved over the last two decades. Figure 5 shows the networks of international co-authorships in 2000 and 2018, indicating a sharp increase in the intensity of co-authorships and a greater number of active countries in the G20 group.

1 The “space literature” dataset has been built by the OECD Space Forum and is based on data from the Scopus Custom Data bibliometric database. It comprises papers from all journals in the space and planetary science classification as well as selected journals in aerospace engineering and journals dedicated to specific space applications (e.g. GPS, GNSS, satellite remote sensing and navigation).

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Figure 4. Share of highly-cited papers by country in the G20 group Share of top 10% highly-cited publications in space literature

2018 2009 2000

Share of space literature 70%

60%

50%

40%

30%

20%

10%

0%

Note: The figure does not include the aggregate data for the European Union. OECD analysis based on Scopus Custom Data, Elsevier (2020). Source: OECD (forthcoming), Handbook on Measuring the Space Economy, second edition.

Figure 5. International co-authorships across highly-cited space literature, 2000 and 2018 Top 10% highly-cited publications in space literature

Note: The size of the nodes is proportional to the number of publications produced in a given year by each country while the weight of the lines is proportional to the number of co-authorships. The figure does not include aggregated data for the European Union. OECD analysis based on Scopus Custom Data, Elsevier (2020). Source: OECD (forthcoming), Handbook on Measuring the Space Economy, second edition.

Wide-reaching societal effects of government space investments can also be tracked, e.g. contributions to wellbeing in developing countries. The OECD has recently started tracing the flows of space-related official development assistance (ODA) (e.g. technical assistance in telemedicine, geographic information systems

8 | using satellite data) (Figure 6). Although not negligible, commitments directed to space-related projects remain modest when compared with overall ODA funding, accounting for some 0.045% of total ODA commitments in the 2000-18 period, or USD 1.28 billion. G20 countries and institutions are among the top donors of space-related official development assistance.

Figure 6. Space-related official development assistance by G20 donor country/region, 2000-18 Share of total space-related ODA commitments

Share of total space-related ODA 12%

10%

8%

6%

4%

2%

0% EU France United States United Japan Canada Korea Germany Australia Italy Saudi Arabia Institutions Kingdom Note: Only G20 donor countries/regions are displayed in the figure. Calculations based on OECD Development Assistance Committee (DAC) database (2020). Source: OECD (forthcoming), Handbook on Measuring the Space Economy, second edition.

There are, however, several remaining challenges associated with measuring the impacts of space activities. First, despite leading efforts by some countries in developing national surveys (e.g. Canada, Italy, Korea, Norway, United Kingdom) and even dedicated experimental statistical satellite accounts (e.g. United States) often in close cooperation with the private sector and industry associations, there is still a lack of internationally comparable economic data. In addition, identifying all relevant impacts and creating causal links are challenging, as there may be decades between the initial government investment and the realised outcomes, even if many ongoing evaluation efforts at national levels, and in the framework of the European Space Agency, are contributing to steadily improving the knowledge base. Finally, some important impacts of space activities are intangible (e.g. scientific discoveries, enhanced national security) and do not easily fit into quantifiable frameworks, thus risking being overlooked.

Options for improved measurement

In order to improve the measurement of the space economy and its broader impacts, a necessary step is to make progress on the availability and quality of data on the state of the space sector, as well as to reinforce in general the evaluation and impact assessment framework of space programmes. In this regard, G20 policy-makers could consider the following steps: • Identify key data and indicator needs for policy decisions, noting they may vary according to national strategies. • Design space industry-specific surveys based on internationally recognised statistical definitions. This facilitates comparisons with other sectors and with other countries, while contributing to

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leveraging the results of often time-consuming and costly data collection efforts. Seeking a strong involvement from national stakeholders in academia, public research institutes and the private sector from the start will contribute to improving data and the uptake of the results. • Use existing and internationally recognised evaluation and assessment methodologies (e.g. cost- benefit analysis of selected space projects), which allow for comparisons and repeat studies (e.g. ex-ante, ex-post). Repeat studies give an indication of benefits over time and may also contribute to checking the credibility of previous assessments. • Share findings and exchange experiences with other stakeholders beyond the space sector and international actors. This helps in taking full advantage of the findings and in pooling resources.

Bibliography

Undseth, M., C. Jolly and M. Olivari (2020), "Space sustainability: The economics of space debris in perspective", OECD Science, Technology and Industry Policy Papers, No. 87, OECD Publishing, Paris, https://doi.org/10.1787/a339de43-en. OECD (2020), “The impacts of COVID-19 on the space industry”, OECD Policy Responses to Coronavirus (COVID-19), updated 5 August, http://www.oecd.org/coronavirus/policy-responses/the-impacts-of-covid- 19-on-the-space-industry-e727e36f/. OECD (2019), The Space Economy in Figures: How Space Contributes to the Global Economy, OECD Publishing, Paris, https://doi.org/10.1787/c5996201-en. O’Connor, A.C., Gallaher, M.P., Clark-Sutton, K., Lapidus, D., Oliver, Z.T., Scott, T.J., Wood, D.W., Gonzalez, M.A., Brown, E.G., and Fletcher, J. (2019), Economic Benefits of the Global Positioning System (GPS), RTI Report Number 0215471, National Institute of Standards and Technology, US Department of Commerce, Research Triangle Park, North Carolina, United States, https://www.rti.org/sites/default/files/gps_finalreport.pdf . OECD (forthcoming), Handbook on Measuring the Space Economy, Second edition, OECD Publishing, Paris.

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