The ‘Space Economy’ Trends: How a Global Overview Relates to Regional Policies

1. The ‘Space Economy’ Trends:How a Global Overview Relates to Regional Policies Claire Jolly, Sr. Policy Analyst OECD Directorate for Science, Technology and Industry • 14th Annual Plenary Conference EISC - SPACE AND SUSTAINABILITY • 21-23 October 2012 - Parliament of Poland, Warsaw, Poland

2. A growingcorpus of OECD work on the space sector • An extensive body of work: • “The space economy at a glance”, OECD series with statistics and indicators; • “Space technologies and climate change”: case studies reviewing applications on water management, marine resources, maritime transport; • “Space 2030 reports”: Results of futures project on the commercialisation of space: prospective study on space applications with long-term horizon at both national and international levels. Key recommendations on framework conditions (+100 organisations consulted). • Coming up (end 2012- early 2013): • “Health Bulletin of the Space Sector: Monitoring the OECD Recommendations” (report end-2012) • “Monitoring global threats: the contribution of satellite technologies” (Final Report) • “Space technologies and food security”(How space applications assist in food production, supplies and transport’s value chains) More on the OECD Space Forum activities: www.oecd.org/futures/space

3. A changing landscape for space activities In 2012, an ever larger group of countries with different levels of satellite capabilities and the emergence of Brazil, China and India alongside the well-established Russian Federation (BRIC) as developers and exporters of space technologies. • More than 50 countries with spaceflight capabilities in 2011 Number of countries which launched satellites (independently or via a third party) Source: OECD (2011), The Space Economy at a Glance 2011, OECD Publishing, Paris.

4. A changing landscape for space activities In 2012, an ever larger group of countries with different levels of satellite capabilities and the emergence of Brazil, China and India alongside the well-established Russian Federation (BRIC) as developers and exporters of space technologies. • More than 50 countries with spaceflight capabilities in 2011 Number of countries which launched satellites (independently or via a third party) Source: OECD (2011), The Space Economy at a Glance 2011, OECD Publishing, Paris.

5. A changing landscape for space activities All G20 countries have space programmes: Conservative estimates of space budgets, 2010 Current USD million • Note: These estimates provide orders of magnitude, as exchange rates may alter direct comparability. Figures reflect all space investments (civil and military budgets) including contributions to the European Space Agency where applicable. Data missing for Saudi Arabia and South Africa. BRIC refers to Brazil, Russia, India and China. • 1. Unofficial data. • 2. For the European Union category, only 17 countries with national space budgets are included: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden and Switzerland. • Source: OECD (2011), The Space Economy at a Glance 2011, OECD Publishing, Paris.

6. Institutional budgets since 2008Reductions in government civil and military space spending…only in some countries • Canada (CSA) • Japan (JAXA) • Brazil • Germany • Source: National data and OECD calculations, Aug. 2012

7. India’s 5 year budget plans for space (from 1974 to 2012) • USD 4.7 Billion • for 2007-12 • Source: OECD (2011), The Space Economy at a Glance 2011, OECD Publishing, Paris.

8. The space economy as an engine of economic growth? • The space sector fared relatively well despite the economic crisis: • thanks to its specificities as a strategic sector (i.e. national imperatives and institutional R&D funding), • but also because of a vibrant ‘space economy’. • The “space economy”includes commercial activities that have been derived over the years from the space sector’s research and development programmes. Several mature downstream activities have reached mass markets, and include information technology products and services, such as satellite television and GPS receivers.

9. The space economy as an engine of economic growth? Estimates on the generation of direct and indirect economic benefits, derived from space activities (1996-2005 period) • To put existing data in perspective: the estimated USD 175 - 200 billion invested in space programmes worldwide could have contributed to some USD 440 - 645 billion in revenues for the entire value chain of the space sector. • Source: AdaptedfromCohendet (2010), OECD workshop “Valuingthe socio-economiccontributions of spaceapplications”, Paris, September - quoted in OECD (2011), The Space Economy at a Glance 2011, OECD Publishing, Paris.

10. Downstream space activities (applications) often much larger than upstream segment (manufacturing) Revenues and employment in the UK space sector • Source: See UK spotlight chapter in OECD (2011), The Space Economy at a Glance 2011, OECD Publishing, Paris.

11. Examiningsocio-economic impacts OECD International Futures Programme

12. Globalisation of the industry: towards more foreignownership • Foreign direct investment (FDI) on the rise: • Most OECD aerospace manufacturers now have joint ventures in non-OECD countries. Although this concerns in priority the aeronautic field (e.g. building aircraft components in a foreign country), satellite manufacturing follows the same trend. • New players (China and India) are now themselves investing in OECD countries. To close the technology gap with well established aerospace players, suppliers in China and India have set up partnering arrangements or have made acquisitions to become more entrenched in the global supply chain. • International trade • Also on the rise for bothaeronautic and space. • Multiplication of industrial offset agreements, which compel the exporters to transfer specific know-how and materials to local industry players, although some obstacles remain (security and defense-related). • Acquisition and Mergers • Accelerating trend in many segments of the ‘space’ value chains(Hughes Network Systems acquired by EchoStar Corp (telecom); Integral Systems acquired by KratosDefense and Security Solutions (ground systems); Space Systems/Loral acquired by MDA Corp (commercial satellite manufacturer); Merger DigitalGlobe and GeoEye (remote sensing))

13. Developing a policy mix to support innovation, including for the space sector: Policy-makers can choose among various tools to encourage innovation at both national / regional level Notes: PRC=public research centre; HEI=higher education institution. • Source: OECD (2011), Regions and Innovation Policy, OECD Reviews of Regional Innovation, OECD Publishing.

14. Cluster initiatives • Knowledge clusters: R&D intensity by region, 2007 • Regional R&D expenditures as a percentage of regional GDP • Governments increasingly focus on regional clusters of innovation. • Half of OECD R&D investment is performed in less than 13% of OECD regions. • Industrial structure, research capabilities and other territorial characteristics affect the capacity of actors to generate and absorb knowledge. Source: OECD (2010), Measuring Innovation: A New Perspective, OECD Publishing.

15. In conclusion…. • Delayed impacts of the economic crisis are affecting some countries (space budgets, industry contracts) • Globalisation of space activities continuing with more actors than ever • The space sector and the wider space economy to continue expanding for the foreseeable future • For regions to reap the benefits (jobs, qualifiedworkforce) = need to develop mix of innovation policies

16. Thankyou for your attention. claire.jolly@oecd.org