The Economic Legacy of the Space Race in the United States

Abstract This chapter explores the effect of the Space Race on local economies from 1958 to 1992. Econometric analysis of Space Race expenditures finds that NASA’s research and development produced statistically significant increases in manufacturing value added, employment, and capital accumulation within the space sector on the order of 35–50% across these measures. The effect was concentrated in space-related technologies and did not extend to general-purpose technologies. Despite the increases to these measures, space sector manufacturers did not experience any productivity gains because manufacturing inputs increased at the same proportion as output. Consequently, the estimated spending multiplier from NASA activity is a modest 0.4, which falls in the range of previous estimates of public expenditure multipliers. The chapter sheds light on the economic effects of the relationship between government-sponsored R&D, technological innovation, and economic growth and offers historical insights into the new space economy.